The Bank of Thailand has warned that the country may not achieve its 1.5% economic growth forecast this year after official August figures underscored slack economic momentum.
Public spending and domestic consumption cooled as exports remained weak, said Roong Mallikamas, senior director for macroeconomic and monetary policy, adding that consumption should improve gradually in the next period thanks to low unemployment and higher confidence.
"The economy is on course to recover, but the rebound looks a bit fragile due to lower than expected public and private spending, which could make a V-shaped recovery weaker," she said.
However, overall stability remains sound with inflation falling for three straight months from June, high foreign reserves and a current account surplus, she said.
The Bank of Thailand's Monetary Policy Committee recently kept its economic growth forecast at 1.5% this year, but cut next year's GDP outlook to 4.8% from 5.5%. This year's forecast has not factored in the new government's proposed economic stimulus measures.
Mrs Roong said the slowdown in private spending in August could be attributed to delays in public spending.
Any impact from an economic stimulus package may not emerge in the final quarter, she said.
Public and private spending are expected to be the major driving forces during the final three months.
The Fiscal Policy Office said on Monday that economic growth was likely to reach 2% this year if stimulus measures in the fourth quarter were taken into account.
"Domestic consumption is lower than expected and slowed down from the second quarter. Even though the economy is somewhat slower, do not panic as it is a normal pattern in every country, including the US, during the early stages of a rebound. The economic indicators can still swing back and forth, so do not be worried," said Mrs Roong.