Thailand's gross domestic product increased in the second quarter by 0.4% year-on-year after contracting by a revised 0.5% in the previous three months, the National Economic & Social Development Board (NESDB) reported on Monday.
The median estimate in a Bloomberg survey was for zero growth.
As a result, Thailand’s baht rose to a three-week high as data showed the economy unexpectedly expanded last quarter, signaling the military government is having some success in reviving growth since the May coup.
Global funds purchased a net US$294 million of Thailand’s bonds and equities last week, exchange data show.
“The better-than-forecast GDP data are positive for the baht amid general risk-on sentiment for emerging-market currencies,” said Tsutomu Soma, the Tokyo-based department manager of the fixed-income business unit at Rakuten Securities. “Although political risk isn’t completely wiped out in Thailand, the situation is better.”
The currency climbed 0.2% to 31.805 per dollar as of 10.02 am in Bangkok, according to data compiled by Bloomberg. It reached 31.763, the highest level since July 29 and was little changed before today’s data release. Some forecasts the currency will rise to 31.50 by Sept. 30.
One-month implied volatility, a measure of expected exchange-rate swings used to price options, rose six basis points, or 0.06 percentage point, to 4.63%, data compiled by Bloomberg show.
Thailand’s 10-year sovereign bonds erased gains, with the yield on the 3.625% notes due June 2023 little changed at 3.453%, according to data compiled by Bloomberg. The yield was up one basis point before the GDP figures were issued.
2014 Outlook
The economy contracted 0.1% in the first six months of the year, with second-quarter growth supported by household spending, the NESDB reported.
The board predicts a 2014 expansion of 1.5% to 2%, it said, with a steady recovery expected in the second half of the year. It sees GDP increasing 3.5% to 4.5% next year.
The military government pushed through more than 92 billion baht ($2.9 billion) in payments to farmers in June that had been delayed under the previous administration of prime minister Yingluck Shinawatra.
The National Council for Peace and Order, the military regime leaders, has approved 67 billion baht in infrastructure spending, economic chief Prajin Juntong told reporters on Aug 14.
“The economy has shown some improvement” since the May 22 military coup, Tim Leelahaphan, an economist at Maybank Kim Eng Securities (Thailand) Plc, said before the figures were issued. “In the second half, the effects of the junta’s economic policies will be visible.”