The economy is still suffering from the impacts of Covid-19 at home and abroad, with consumption and investment down and exports slowing, but activity is improving after an easing of restrictions, the central bank said on Thursday.
Thailand's most devastating Covid-19 outbreak led to curbs imposed in July and August that slowed activity, but those were relaxed this month to help support an economy struggling from a collapse of tourism.
In August, "overall economic activities, household income, and consumer confidence deteriorated in spite of government measures which partially supported the household purchasing power," the Bank of Thailand said in a statement.
Economic activity, however, has improved after the relaxation of curbs but supply chain disruption would need close monitoring, the central bank said.
The economy in the third quarter is likely to slow from the second quarter but will gradually recover in the fourth, Bank of Thailand director Chayawadee Chai-Anant told a news conference.
On Wednesday, the Bank of Thailand maintained its 2021 economic growth forecast at 0.7% and left its key rate at a record low.
Flooding in several parts of the country may affect some logistics but industry has prepared well so the economic impact should be limited, she said.
Recent weakness in the baht has been rapid due to factors including the monetary policy of major central banks and Thailand's current account deficit, Ms Chayawadee said.
"Given various factors, the baht is likely to remain highly volatile and depreciate quickly," she said.
"But the Bank of Thailand has taken action periodically to prevent [the baht] from being too volatile and move too rapidly that it affects the adjustment of the real sector. It is still closely monitored," she said.
The baht has weakened by 11% against the dollar so far this year, the worst performing Asian currency.