The economy is gradually improving, driven by private consumption and investment, but the implementation of public investment projects is expected to propel the recovery further, says a senior Bank of Thailand official.
Fiscal spending on public investment schemes would enhance recovery momentum and shore up private investment incentives, said Roong Mallikamas, senior director of macroeconomic and monetary policy.
"Although the direction of investment policy is clear, the fiscal side could help stimulate private investment incentives to occur faster if [investment] implementation takes place," she said, adding that low borrowing costs support consumers' debt-servicing ability.
She said the global economic recovery, albeit slower than expected, would also bolster Thailand's economic recovery.
"The recovery process might be somewhat unsteady and fragile in the initial stage, but stronger recovery momentum later would help reduce the unstable condition," said Mrs Roong.
Since cutting the benchmark interest rate by 25 basis points in March, the central bank has kept its policy interest rate unchanged at 2% for six consecutive meetings in a bid to provide a financial environment conducive to economic recovery.
It has also slashed its economic growth forecasts for this year and next to 0.8% and 4%, respectively, while projecting export growth to decline by 0.5% in 2014 and attain a lukewarm growth rate of 1% in 2015.
Thailand's economy continued to recover in November. The private consumption index increased by 0.7% year-on-year, up from a 0.3% contraction in October.
Consumption of durable goods has been subdued on the back of tepid economic recovery, but durable goods consumption is expected to pick up next year, said Mrs Roong.
"Overall economic indicators of every sector in October and November showed signs of stronger recovery compared with conditions in the third quarter," she said.
She said the loss of Generalised System of Preferences privileges for Thai exporters to the European Union next year could take a toll on manufacturers of canned products, but several exporters are minimising the impact by relocating their production bases to neighbouring countries.
Merchandise exports declined by 1.8% in November, suffering from soft demand in China, Europe and Japan as well as declining prices of oil-related goods such as petroleum, rubber and chemical products.
Export quantity in the first 11 months grew by 0.6% on an annual basis, but export prices declined by 0.9%, so the net value of exports contracted by 0.3%.
The current account recorded a surplus at US$1.66 billion in November due to a slump in global oil prices.