Thailand's private consumption and investment rose in September, but the country's exports and industrial output shrank again, suggesting the economy is not regaining momentum.
Stubbornly weak exports and domestic demand have kept Southeast Asia's second-largest economy in the doldrums since the May 2014 coup.. Growth was just 0.9% last year.
The index for private consumption, which makes up half of the economy, rose 0.5% in September from August, with investment up 0.4%, the Bank of Thailand said on Friday.
"The economy recovered at a gradual pace, with signs of recovery in private consumption and investment. But the export sector remained a drag," Roong Mallikamas, a senior central bank official, told a news conference, referring to September data.
She added that the economy had also performed better in the third quarter than the previous quarter, but the pace of recovery was slow.
In April-June, the economy grew 0.4% from the previous three months and 2.8% from a year earlier. Third-quarter gross domestic product is due on Nov 16.
Charnon Boonnuch, economist at Tisco Securities, said the third quarter was expected to be the strongest this year, predicting quarterly growth of 1.4% and annual expansion of 3.4%.
"Looking ahead, I remain cautious whether the good numbers in September will be short-term or long-term," he said.
The BoT has forecast GDP growth of 2.7% for 2015 and 3.7% next year.
Weak global demand, especially from China, and structural problems at home are dragging on exports and manufacturing, while consumption is being curbed by high household debt.
Exports, equal to more than 60% of GDP, shrank for a ninth straight month in September. The BoT has forecast exports will contract 5% this year for the third year running.
Thai exports, in particular electronics, "have not been able to move up the value chain fast enough," Nomura Securities wrote in a note. "There is also a diplomatic challenge which has emerged under the current military regime in its inability to renegotiate or participate in trade agreements.".
Annual industrial output in September dropped 3.6%, having fallen every month, except February, since April 2013. The decline in output was led by electronics, but auto production rose 4.4%.
Capacity utilisation in September rose to 58.83% from a revised 57.85% in August. Thailand is a regional production and export hub for hard drives and cars.