Thai GDP tops forecasts, flood recovery helps offset global woes

* Q2 GDP q/q 3.3 pct vs poll 1.7 pct, revised 10.8 pct in Q1

* Q2 GDP y/y 4.2 pct vs poll 2.9 pct, revised 0.4 pct in Q1

* Trims 2012 GDP f'cast to 5.5-6.0 pct, slashes export view

* Manufacturing rebound after floods, tourism among key factors

* Most economists expect no change in policy rate all year (Adds detail, qoutes)

By Orathai Sriring and Kitiphong Thaichareon

BANGKOK, Aug 20 (Reuters) - Thailand's economy grew a stronger-than-expected 3.3 percent in the second quarter from the previous three months as it continued to recover from last year's devastating floods, helping it withstand the global slowdown for now.

Given the recovery, economists said there was no pressing need for the central bank to cut interest rates. Most expect it to leave policy on hold all year after cuts in November and January to help industry deal with the disaster.

The second-quarter figure reported on Monday by the National Economic and Social Development Board (NESDB) was higher than the 1.7 percent expected in a Reuters poll, and came after a revised record 10.8 percent expansion in the first quarter, when economic activity started to rebound from the floods.

"Second-quarter GDP increased because factories were able to increase their manufacturing capacity, although that is not back to full potential yet," Arkhom Termpittayapaisith, secretary-general of the NESDB, told a news conference.

A high number of tourists also helped in the second quarter, the NESDB said.

"Domestic demand remained strong and is providing enough cushion against global economic risks, at least for the near future," said Usara Wilaipich, an economist at Standard Chartered in Bangkok.

Elsewhere in Southeast Asia, growth in Indonesia and Malaysia was also surprisingly buoyant in the second quarter, with strong domestic demand and government spending offsetting weaker exports, though Singapore's trade-reliant economy shrank. (Indonesia GDP Malaysia

Despite external uncertainty, the NESDB said it expected the Thai economy to grow 5.5-6.0 percent this year, little changed from the 5.5-6.5 percent predicted in May, betting on domestic demand and further recovery in the manufacturing sector.

"The agency has trimmed the higher end of the forecast because exports to Europe have been affected," Arkhom said.

Exports fell in June and were forecast by a Reuters poll to drop again in July.

The NESDB cut its export growth forecast for 2012 to 7.3 percent from 15.1 percent. Arkhom said that was also due to lower rice exports as a result of a government intervention scheme that has made prices uncompetitive.

Even so, reflecting the unusual post-flood situation and the steady recovery in industry, exports in the second quarter were much improved from the first. They were only 0.4 percent lower than a year before after a drop of 4 percent in January-March.

The government has introduced measures to help firms cope with the floods, and demand has benefited from policies promised during last year's election, such as big wage increases and the rice intervention scheme, which will boost income and spending.

STEADY RATES

The central bank, which cut its policy rate in November and January to help business deal with the floods, has said economic growth is close to potential as domestic demand has picked up.

It has left the rate at 3.0 percent at the last four meetings and may stay there unless the global economy worsens.

"Interest rates will probably stay unchanged this year. The global situation is not so severe that we need a rate cut yet," said Thammarat Kittisiripat, an economist at TMB Bank.

The floods ravaged huge industrial zones last October, hitting car and electronics firms. Thailand is Southeast Asia's biggest car producer and the world's number two maker of hard disk drives.

The Industry Ministry has said car firms are now fully operational but some electronics firms may still not be back to normal until the fourth quarter.

Manufacturing rose 2.7 percent in the second quarter from a year earlier while private investment rose 11.8 percent and household spending increased 5.3 percent, the agency said.

From a year before, the economy grew 4.2 percent in the second quarter, beating the forecast of 2.9 percent in the Reuters poll. The agency revised up annual growth in the first quarter slightly to 0.4 percent from 0.3 percent.

The NESDB said it expected the economy to grow 4-5 percent in the third quarter from a year before.

Last month, the central bank cut its GDP growth forecast FOR 2012 to 5.7 percent from 6 percent. Economists in a Reuters poll predicted 5 percent, after 0.1 percent growth in 2011 due to the floods.

The NESDB cut its 2012 headline inflation forecast to 2.9-3.4 percent from the 3.5-4.0 percent seen in May. The central bank has predicted 2.9 percent. (${esc.dollar}1=31.50 baht) (Additional reporting by Boonitwa Wichakul, Viparat Jantraprap and Amy Sawitta Lefevre; Editing by Alan Raybould & Kim Coghill)