(Adds detail, economist comments) * Q3 GDP -1.1% q/q sa vs -2.5% in Reuters poll * Q3 GDP -0.3% y/y vs -0.8% in poll * Agency raises 2021 GDP growth outlook to 1.2% from 0.7-1.2% * Sees 2022 GDP growth at 3.5%-4.5% BANGKOK, Nov 15 (Reuters) - Thailand’s economy contracted less than expected in the third quarter as businesses started a slow recovery from the coronavirus-driven slump in activity, while the reopening of the tourism sector raised hopes of a steady revival. The government upgraded its economic growth outlook to 1.2% this year, compared with a previous forecast of 0.7%-1.2% expansion, and projected 3.5%-4.5% growth in 2022, thanks to an easing of COVID-19 curbs and a reopening to overseas travellers to reboot its vital tourism industry. Southeast Asia’s second-largest economy tumbled 6.1% last year. The economy shrank a seasonally adjusted 1.1% in the September quarter from the previous three months, data from the National Economic and Social Development Council showed, versus a forecast 2.5% drop in a Reuters poll, and a revised seasonally adjusted 0.1% growth in the June quarter. From a year earlier, gross domestic product (GDP) shrank 0.3% in July-September, a shallower than expected fall than the forecast 0.8% drop, and against a revised 7.6% growth in April-June. “We expect GDP to rebound strongly in the final quarter now that cases are falling, restrictions are being lifted and the vaccine rollout is gaining momentum,” said Gareth Leather, senior Asia economist at Capital Economics. Increased exports and fiscal measures helped to limit the fallout from the pandemic. The NESDC expects exports to grow 16.8% this year versus a 16.3% rise seen earlier. In 2022, it predicted 4.9% export growth. Exports in the third quarter grew 15.7% from a year earlier, but private consumption was hurt by the COVID-19 curbs and dropped 3.2%. The agency predicted 200,000 foreign tourists this year, compared with 150,000 seen previously, and forecast 5 million visitors next year. There were 40 million foreign tourists in 2019. With a fraction of foreign tourists expected compared with pre-pandemic levels, most analysts expect the economic recovery will be slow. The government has introduced billions of dollars of relief measures to help revive the economy while the central bank has left its key rate at a record low of 0.50% since May 2020. “Beyond the fourth quarter, the prospects for the recovery hinge on how quickly the tourism sector recovers,” Capital Economics’ Leather said. (Reporting by Orathai Sriring, Kitiphong Thaichareon and Satawasin Staporncharnchai; Editing by Shri Navaratnam)