A broader-based recovery is expected this year from stronger agricultural and export sectors and more government spending in provincial areas, says the governor of the central bank.
"For this year, the Bank of Thailand expects the recovery of the Thai economy to be more broadly-based from three supporting factors," said Bank of Thailand governor Veerathai Santiprabhob.
These factors include a higher level of water in dams across country that can be used in the farm sector, compared with last year. The government has also readjusted its fiscal 2017 budget to focus on investment in the provinces by using the midyear budget.
"Also, a broader-based recovery of the export sector will help extend areas of recovery," said Mr Veerathai.
He said the higher level of water should ease tensions on the agricultural sector if there is a drought at some point this year, while the higher prices of some farm products should further increase income for Thai farmers.
Mr Veerathai said that even though the fiscal 2017 budget deficit is set to equal that of the previous year, the government has set aside additional midyear budget of 190 billion, which will increase spending in the provinces, enhancing the role of the government as an economic engine.
Moreover, state enterprises also plan on investing more this year, including both ongoing projects from last year such as dual-tracks, motorways and the number of electric trains, which are expected to start operating this year.
"Merchandise exports are expected to recover better than last year in line with the global economic recovery, which many institutions similarly forecast will grow," said Mr Veerathai.
He said signs of a more broadly-based recovery for Thai exports and those of other Asian countries have been present since the second half of 2016, adding that support from exports should help spur private investment this year.
The central bank has forecast flat growth of merchandise exports this year, up from a 0.6% contraction last year. The export of services, meanwhile, especially in the tourism sector, is expected to slow down this year, he said.
He said Thailand will continue to face structural problems this year, including a long period of low private investment.
"According to a survey done by the Bank of Thailand in 2015, 65% of 270 companies have no plans to invest or only plan on spending a small amount on repairs and maintenance," said Mr Veerathai.
He said he is encouraging the private sector to invest more this year as the government is offering a number of incentives and the financial costs remain low.
The Bank of Thailand recently projected that the Thai economy will grow 3.2% this year -- the same rate predicted for 2016.
Mr Veerathai said for this year, the Bank of Thailand will maintain its expansionary monetary policy to accommodate the country's economic recovery.
He said unpredictable policies of the US are expected to cause higher volatility in global financial markets, as seen in the movement of the global bond yield after the US presidential election.
Mr Veerathai said that as Thailand has a floating exchange rate regime, the baht will be the first line of defence against increased fluctuations abroad.
"At some point, we might have to take care of the volatility of the baht if we find that it is too high, which could affect the economic recovery," he said.