BANGKOK - Thailand's economy grew 0.9 per cent in the second quarter, dodging recession after the military ended months of political deadlock with a coup and promised to unshackle spending.
The junta, under coup-leading Army Chief Prayut Chan-O-Cha, has pegged its legitimacy to improving the economy after months of political protests froze government spending, scared off tourists and battered consumer spending.
Between April and June the economy crept back to life with 0.9 per cent growth after shrinking a revised 1.9 per cent in the preceding three months, the National Economic and Social Development Board reported.
On a year-on-year basis, the economy grew 0.4 per cent, NESDB said.
Since seizing power on May 22, Prayut has opened the coffers -- pledging to kick-start stalled investment projects, including major train and road links, and paying state debts to rice farmers to help spur agriculture.
Despite the positive momentum, Southeast Asia's second largest economy still looks set for a disappointing year.
The board clipped its growth outlook for 2014, forecasting 1.5-2.0 per cent expansion, down from a previous estimate of 1.5-2.5 per cent.
It said the political turmoil of the first five months of 2014 would likely drag the economy to "perform below its potential" over the full year, with key auto and tourism sectors still flagging.
Visitor numbers to Thailand are down just over 12 per cent year-on-year, despite desperate efforts to reassure tourists that the 'Land of Smiles' is safe.
On Monday Prayut proposed a 2.57 trillion baht budget for 2015 to the army-appointed National Legislative Assembly.
Prayut said the spending plan, which awaits the NLA's approval, is around $1.6 billion more than 2014 but pledged it will be disbursed with "capability and efficiency and transparency."
Critics of the elected former government of Yingluck Shinawatra said her government squandered money on populist policies such as a flagship rice subsidy scheme.
Prayut, who has appointed the air force chief to oversee the economy, has said the power grab was necessary to restore the nation's economic fortunes as well as peace and order.
The junta has installed an assembly which is expected to elect a new prime minister over coming days. Thai media hotly tips Prayut for the post.
The stock market has shot up nearly ten per cent since the coup.
Analysts expect domestic demand to creep forward as the junta's policies kick in but are less enthusiastic over the speed of economic expansion.
"Growth prospects have brightened since the military takeover, which reduced political uncertainties and restored relative peace to the country," said analysts Capital Economics in a briefing note.
"Nonetheless, the economy continues to face several headwinds, such as high household debt burdens. As such, growth is unlikely to return to its trend rate anytime soon."
The kingdom had enjoyed a reputation as "Teflon Thailand" for its enviable record of economic resilience in the face of the last eight years of political upheaval as well as devastating floods in 2011.