BANGKOK -- Thailand's economic expansion accelerated in the second quarter due to stronger consumption, tourism and exports, but analysts said policy uncertainty following a change in government clouds the outlook.

Gross domestic product grew 2.3 percent in the April-June quarter from a year earlier, National Economic and Social Development Council (NESDC) data showed, versus an upwardly revised 1.6 percent in the first quarter and beating 2.1-percent forecast in a Reuters poll.

Growth in Southeast Asia's second-largest economy was driven by improved government consumption, export of goods and services as well as private consumption, while public and private investments contracted, the state planning agency NESDC said in a statement.

On a quarterly basis, GDP grew a seasonally adjusted 0.8 percent in the second quarter, slower than an upwardly revised 1.2-percent expansion in the previous three months and 0.9-percent growth forecast in the poll.

"We expect it to decelerate a bit further in the coming quarters as the boost from tourism fades and with uncertainty around fiscal policy now elevated," Shivaan Tandon, markets economist at Capital Economics, said in a note, predicting interest rate cuts from October.

Thailand's main stock index rose 1.2 percent at 0526 GMT, while the baht strengthened 0.5 percent against the dollar.

The central bank left its key interest rate (THCBIR=ECI) unchanged at a decade-high of 2.50 percent for a fourth straight meeting in June, and is expected to hold the rate again when it meets on August 21.

The NESDC now expects GDP growth of between 2.3 percent and 2.8 percent this year, narrowing from its previous forecast range of 2.0 percent to 3.0 percent. The economy grew 1.9 percent last year.

Thailand's economy has lagged regional peers as it faces high household debt and borrowing costs as well as sluggish exports amid a slowdown in top trading partner China.

The outlook is further clouded by political turmoil after last week's court order removed former Prime Minister Srettha Thavisin for violating the constitution over a cabinet appointment.

Political neophyte Paetongtarn Shinawatra, daughter of divisive former Prime Minister Thaksin Shinawatra, was endorsed as prime minister on Sunday but has yet to form a cabinet.

Paetongtarn, who has not served in government previously, faces challenges, with the economy floundering and the popularity of her Pheu Thai party dwindling, having yet to deliver on its flagship 'digital wallet' cash handout program worth 500 billion baht ($14.5 billion).

The government needs to introduce stimulus measures, NESDC head Danucha Pichayanan told a press conference.

"Stimulating the economy through consumption will help support the economy and solve people's livelihood problems," he said.

The planning agency maintained its export growth forecast at two percent for this year.

The economy has been supported by the tourism sector, which saw 21.8 million foreign tourists since the start of 2024 to August 11, up 33 percent from a year earlier.

The agency still expects 36.5 million foreign tourists this year. There were a record of nearly 40 million foreign tourists in 2019, before the pandemic.

($1 = 34.43 baht)