Optimism found its way back to Thailand's economy after it suffered from the consequences of the worst financial crisis since the great depression. Thailand expanded during the second quarter as the world slump eased and the nation's exports and industrial output began to recover.

Quarterly gross domestic product came in at 2.3% in the second quarter compared with a previous revised -1.8% from -1.9% and the reading came inline with expectations. The economy shrank 4.9% on yearly basis compared with a prior contraction by 7.1%, while it was forecasted to shrink 5.1%.

The economic slump eased and economic conditions in major economies stopped worsening, thanks to the $2.2 trillion that was provided by governments around the world that helped demand stabilize and start increasing gradually, which was reflected on Thailand exports as it boosted recently.

Economic conditions in the Asian region are much better than last year, as China, which is leading recovery in Asia, managed to expand 7.9% in the second quarter, while Japan the world's second largest economy found its way out of recession and expanded an annual 3.7%.

However, deteriorations in the industrial sector eased as manufacturing output fell 8.4% in the second quarter compared with a revised decline by 14.4% during the first quarter, which is giving signs that the worst part of the crisis has passed and the economy reached the bottom.

Government spending rose 5.9% in the three months ended June, while private consumption fell 2.3% and total investment declined 10.1%.

The government of Thailand provided 1.06 trillion baht ($31 billion) as a three year investment program hoping to support economic growth. The stimulus packaged focused on transportation, logistics and other infrastructure projects. The government also spent 116.7 billion baht in the first quarter to offset the weakened exports and industrial sector.

Monetary policy makers also had a great rule, as interest rates were cut to 1.25% to spur demand and realize recovery. Thailand central bank may keep borrowing costs at the current level as there is no need to have more cuts in the nation's benchmark, noteworthy that the central bank rate decision will be released later this week.

Finally, the economic agency expects the economy to shrink 3.5% this year, while previous forecasts in May referred to a contraction between 2.5% and 3.5%. On the other hand, the Bank of Thailand expects the economy to shrink 4.5% in 2009.