By Orathai Sriring and Kitiphong Thaichareon
BANGKOK, Nov 18 (Reuters) - Slower-than-expected growth figures in Thailand have bolstered expectations the central bank will keep interest rates at a near three-year low next week to support the economy in the face of sluggish consumer spending and exports.
Southeast Asia's second-biggest economy after Indonesia grew 1.3 percent in July-September from the previous three months, following a revised flat reading in the second quarter, data released on Monday showed.
It was the first expansion in three quarters, driven by robust growth in tourism, but missed economists' expectations for 1.7 percent growth as declines in household spending and business investment weighed.
The state planning agency on Monday also slashed its full-year growth estimate to 3.0 percent from a 3.8-4.3 percent range previously, blaming weakness in domestic demand and exports. Economists in a Thomson Reuters poll had expected 3.5 percent growth.
The agency, the National Economic and Social Development Board, cut its 2013 export growth forecast to zero from 5.0 percent previously.
Thailand, like other Asian exporters, has been hurt by weakness in global demand that is depressing industrial production. Domestic consumption - which makes up about half of the economy - has slowed due to the fading impact of government stimulus and recovery work after the floods of late 2011, while recent political tensions have hurt consumer confidence.
'Slowing private consumption and declining consumer confidence, coupled with a weak recovery in the external sector will continue to weigh on Thailand's growth momentum,' said Bernard Aw, an economist with Forecast Pte. in Singapore.
Compared with a year earlier, third-quarter gross domestic product rose 2.7 percent, against growth of 2.9 percent expected by economists and following a revised 2.9 percent increase in the April-June period.
The baht was steady around 31.57 per dollar after the data, while the stock market was up 0.3 percent at 0540 GMT.
The Bank of Thailand's monetary policy committee meets next on Nov. 27 for its last review this year. It has kept the benchmark interest rate at 2.50 percent, its lowest since January 2011, since cutting it in May this year.
Economists said they expect the central bank will remain on hold for some months, keeping the rate low enough to underpin the economy, but refraining from lowering it further due to high household debts and risks from potential capital outflows as the U.S. Federal Reserve prepares to taper its stimulus.
Meanwhile, consumer confidence fell to its lowest in 19 months in October, hit by anti-government protests over a controversial amnesty bill, though the demonstrations have been peaceful so far.
'A tough road is still ahead for the economy, as personal consumption looks to have weakened further in the first few weeks of Q4 so far,' said Gundy Cahyadi, a Singapore-based economist at DBS Bank.
In the third quarter, Thailand's economy benefited from strong growth in tourism, up 26 percent from a year earlier.
But household spending fell 1.2 percent from a year earlier due to lower spending on cars after a subsidy scheme expired. Thailand is Southeast Asia's biggest car market and an important country for Japanese automakers like Toyota Motor Corp.
Private investment dropped 3.3 percent year-on-year.
The planning agency said it expects year-on-year growth of just 1 percent in the current quarter because of the comparison with the high base a year earlier, when GDP rose a record 19.1 percent in a recovery from the flood-devastated 2011.
But it was upbeat on the economy's prospects for 2014 on an expected improvement in exports and on government investment.
'The economy is expected to grow 4-5 percent next year and exports could increase 7 percent. Public investment will also be a major factor driving growth,' the agency said.
(Additional reporting by Pairat Temphairojana; Editing by Chris Gallagher) Keywords: THAILAND ECONOMY/GDP
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