The economy is expected to expand by 4.3% this year driven by a strong rebound in public and private investment, while the reform process will help sustain future growth momentum, says a Bank of Ayudhya (BAY) economist.
Sujit Chaivichayachat, head of BAY's macroeconomic research unit, said public and private investment are seen as major drivers of economic growth this year, which will support improved growth prospects in the medium term.
"Although the percentage shares of GDP for public and private investment are not as high as that of consumption, these two factors are crucial to driving up consumption growth and attracting foreign investment," she said.
The think-tank projects public and private investment to expand by 10-12% and 6-8% in 2015, respectively, up from last year's contracted forecasts for both public and private investment at 4% and 0.6%, respectively.
The economy could register growth of 4-5% in the first half of 2015, but this would be because of the low-base effect coming from dismal economic growth in the first half of 2014, said Mrs Sujit.
The economy contracted by 0.1% year-on-year in last year's first half on the back of the political turmoil, denting private consumption confidence and investment incentives, as well as sluggish export growth.
"Exports, tourism and domestic consumption are expected to normalise moderately, but not fully, because several limitations still remain," said Mrs Sujit.
Veerathai Santiprabhob, a member of the Monetary Policy Committee, said Thailand is not facing deflation, but rather experiencing disinflation, where inflation is in a negative territory or continues falling, due to lower global oil prices.
Private consumption and private investment remain on a recovery path, albeit at a moderate pace, despite January's negative inflation, he said.
The government has clear policies on stimulating the lacklustre economy, such as boosting public spending in rural areas by means of repairing schools, hospitals and irrigation systems coupled with investment in infrastructure development as well as providing support for those on lower incomes due to a decline in agricultural prices, Mr Veerathai said.
Cash giveaways are an option to alleviate farmers' economic plight, but cash handouts should be restricted to financial support as opposed to increasing their profits, he said.
Deyi Tan, Morgan Stanley's Asean economist, said Thailand should stimulate its economy through fiscal policy because this would raise investment prospects, while monetary policy has a limited scope in boosting economic growth.
Boonsithi Chokwatana, chairman of the Saha Group, forecasts GDP in 2015 will grow only 2%, half the figure projected by the Bank of Thailand, because there is no new positive factor to drive growth.
However, Thailand has several advantages compared with other countries in the region. Thailand may be the hub of Asean in the north, with Myanmar, Laos and Cambodia. All these countries accept the baht.
Vikrom Kromdit, chief executive of Amata Corporation Plc, is more optimistic than Mr Boonsithi. He believes GDP can grow at least 6% if there is investment by the government, the private sector and foreign investors.