Domestic consumption prompted by falling oil prices and improving private investment will drive economic growth to 4% in the first quarter, says Deputy Prime Minister MR Pridiyathorn Devakula.
MR Pridiyathorn: Domestic consumption rising, government ready to disburse infrastructure financing.
Both domestic consumption and private investment have gained traction since the final quarter last year and are the major contributors to GDP, he said, adding that growth would have expanded by at least 2% during the October-to-December quarter.
He recently estimated growth in the final quarter would come in at 2.5-3%, meaning that 2014 GDP would expand by less than 1% — the lowest level since the devastating floods in 2011 when Thailand saw mere 0.1% growth.
About 1,500 of the 3,800 plants that won operating licences late last year are expected to start up this quarter after 1,608 plants began operating in the fourth quarter last year, MR Pridiyathorn said in a speech Wednesday.
"The speed of private investment will ramp up in the first quarter," he said.
However, disbursement of the government's investment budget is too small, he said.
Around 41 billion baht, representing 9% of the 459-billion investment budget for the 2015 fiscal year that started on Oct 1, was disbursed in the final quarter.
He said disbursement of the regular budget was fairly good, with 726 billion baht of the 2.575-trillion-baht expenditure for this fiscal year drawn down in the final quarter.
Mr Pridiyathorn said two-thirds of the 80-billion-baht in construction contracts for infrastructure projects were expected to be disbursed this quarter as another driver of economic growth.
To sustain growth, he said the government would focus on supporting new industries that use available natural resources such as rubber, as well as raw materials for fertiliser.
Thailand can be one of the largest raw material sources for producing fertiliser as the country has 400 billion tonnes of potash reserves, he said.
The government plans to approve three potash mines this year.
Pushing Thailand as a headquarters for multinational companies is another government priority in pursuing sustainable growth.
The draft bill on tax exemption for profits, dividend repatriation and capital gains of international companies with regional headquarters in Thailand is waiting for royal endorsement.