Asian Development Bank (ADB) is the latest institution to raise Thailand's economic growth forecast to 3.2% this year, following stronger-than-expected growth in the first half.
The move appeared to be a reversal of the multilateral lender's forecast on Thailand's economic growth outlook after it slashed this year's growth estimate in March to 3% from its previous projection of 3.5%.
Public spending and political stability have also contributed to the revised growth estimate, said Luxmon Attapich, ADB's senior country economist.
The government's big-ticket infrastructure investment will build up private sector confidence and this is further evidenced by the pickup in consumer confidence and business sentiment indices, she said.
The referendum approving the country's new constitution confirmed next year's election, which also bolstered private sector confidence, she said.
With clearer political direction, the government's infrastructure investment plan is confirmed to continue and this, in turn, will support the country's economic expansion.
"Political stability is a key factor driving the Thai economy. The 3.2% GDP growth forecast is also contingent on smooth general elections," Mrs Luxmon said.
Thailand's economy unexpectedly grew 3.3% in the first three months to March before accelerating to 3.5% for the second quarter, putting first half growth at 3.4%. With upbeat economic growth and better-than-expected private consumption, the Bank of Thailand this month raised its forecast on GDP growth to 3.2% from its previously forecast 3.1%.
The Manila-based lender revised its government investment growth projection for 2016 to a range of 9.5-9.8% from 8% earlier. It also raised Thailand's private consumption growth to 2.8% this year from 2.5% earlier predicted.
Despite signs of exports improving during the first eight months of this year, the ADB predicted Thailand's outbound shipments would remain in a contraction this year before bouncing back to less than 1% growth next year.
The bank revised its export contraction estimate for Thailand to a range of 1-2% this year from the March prediction of a 1% decline.
The ADB maintained next year's GDP growth prediction of 3.5%, subject to several uncertainties such as the US presidential election, Brexit and Japan's stalling economy.
Mrs Luxmon said the monetary policy of advanced economies would disrupt foreign capital flows and complicate macroeconomic management across the world.
If the US Federal Reserve jacked up its policy rate twice, this year and next year, that would not prompt the Bank of Thailand to raise the benchmark rate, as low inflation pressures and the country's fragile economic recovery will give space for accommodative policy, she said.
The ADB forecasts that the Thai central bank will hold the rate at 1.5% until next year.
If the government introduces additional economic stimulus packages, it will give a marginal boost to the economy, Mrs Luxmon said.