First-quarter growth forecast to hit 4% 

First-quarter growth forecast to hit 4% 

Economic growth is expected to come in at 4% in the first quarter of 2015, driven by government megaprojects, recovering private investment and domestic consumption, pushing full-year growth to 4.5%, says Deputy Prime Minister MR Pridiyathorn Devakula.

"Government efforts in the past three months have yielded fruit and driven the economy to achieve 3% growth in this year's final quarter as projected by the National Economic and Social Development Board," he said yesterday about the first three months' performance of the government led by Prime Minister Prayut Chan-o-cha.

The economy contracted in the previous three quarters, shrinking by 0.5% in the first quarter, 0.4% in the second and 0.6% in the third.

Nonetheless, the government is maintaining its growth target at 1% this year.

MR Pridiyathorn attributed growth in the fourth quarter mainly to the government's accelerated fiscal disbursement as well as recovering domestic consumption and private investment.

These key supporting factors will play a vital role in boosting the economy to achieve 4.5% growth next year, he said.

As of last Friday, budget disbursement for the fourth quarter amounted to 730 billion baht, up by 70 billion baht year-on-year, with total disbursement in the fourth quarter expected to top 800 billion baht.

The government's planned massive investment in megaprojects will be also be instrumental to growth in 2015.

At least 100 billion baht will be earmarked for investment in road construction excluding mass transit, double-track rail routes and air transport.

Household consumption is also expected to recover in the first quarter due to the government's budget injection to help rice and rubber farmers.

A cash handout of up to 15,000 baht each for 3.59 million rice farmers, worth a combined 40 billion baht, is scheduled to be completed this month.

Falling oil prices are expected to help each family save about 800-900 baht per month, allowing them to spend more on other activities.

Private investment is expected to soar this month after the Industry Ministry eased regulations and awarded 2,957 factory licences.

These factories are expected to commence operations gradually from this quarter and next.

New investment promotion strategies including those promoting foreign direct investment and regional operating headquarters and tax measures for SMEs will also help to boost investment next year.

However, MR Pridiyathorn said the declining oil price remained the key risk factor for economic growth next year, with the falling price of oil expected to have both negative and positive effects on Thailand.

In a related development, the Office of Agricultural Economics (OAE) said Thailand's agricultural economy was now expected to grow at a slower pace of 1.2% in 2014.

That would be far lower than an earlier projection of between 2.1% and 3.1%.

The OAE cited severe drought and floods that ravaged many plantations as factors that lowered the output of rice in many provinces and would draw slight growth for the crop sector, only about 1.5% from last year.

The shortage of shrimp due to early mortality syndrome is expected to cause the fisheries sector to contract by 1.8% this year despite the industry finding a solution to the disease.

OAE secretary-general Lersak Riewtrakulpaibul expects to see a significant improvement next year.

The farm economy should grow by 2-3% thanks to increased production of several cash crops, he said.

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