By Orathai Sriring and Kitiphong Thaichareon
BANGKOK, Nov 18 (Reuters) - Thailand's economy expanded for the first time in three quarters in July-September but at a slower pace than expected, suggesting the central bank will keep rates low to support growth in the face of still-weak domestic demand.
Southeast Asia's second-biggest economy after Indonesia expanded 1.3 percent in the third quarter from the previous three months, government data showed on Monday. That was up from a revised flat reading in the prior quarter but missed expectations for 1.7 percent growth in a Reuters poll of economists.
Compared with a year earlier, third-quarter gross domestic product rose 2.7 percent, against 2.9 percent forecast in the Reuters poll and a revised 2.9 percent increase in the previous three months.
The government said third-quarter growth was driven by strong gains in tourism. But household spending fell 1.2 percent from a year earlier due to lower spending on autos after a first-car subsidy scheme expired, while private investment dropped 3.3 percent year-on-year, it said.
Domestic consumption - which makes up about half of the Thai economy - has slowed due to the fading impact of government stimulus measures and recovery work after the severe floods of late 2011. Delays in public infrastructure plans have also weighed on investment.
Thailand, like other Asian exporters, has also been hurt by weakness in global demand that is depressing industrial production. Indonesia's economy grew at its slowest in nearly four years in the third quarter due to weak exports and slowing consumption.
Thailand's National Economic and Social Development Board (NESDB) on Monday cut its forecast for full-year economic expansion to 3.0 percent, versus a range of 3.8-4.3 percent seen in August. The Reuters poll projected 3.5 percent growth, while the central bank has forecast 3.7 percent.
The NESDB also cut its 2013 export growth forecast to zero from 5.0 percent previously.
For 2014, the agency predicted economic growth of 4.0-5.0 percent.
The Bank of Thailand's monetary policy committee has left the benchmark interest rate unchanged at an over two-year low of 2.50 percent since cutting them in May, saying the rate is still low enough to underpin the economy.
It meets next on Nov. 27 for its last review this year, and economists expect it will remain on hold for some months.
(Editing by Chris Gallagher) Keywords: THAILAND ECONOMY/GDP
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