Economic growth accelerated more than expected in last year's fourth quarter, but the rate was still not enough to achieve 1% annual growth as projected by the government's planning agency.
The National Economic and Social Development Board (NESDB) yesterday reported the fourth-quarter economy grew by 2.3% year-on-year, an improvement from 0.5% in the first quarter, 0.4% in the second quarter and 0.6% in the third quarter.
But full-year growth was only 0.7%, falling short of the 1% forecast by the think tank last November. The figure was also well down on the 2.9% recorded in 2013.
Thailand's economic growth in 2014 has fell behind neighbouring countries, according to Bloomberg Finance.
Tepid economic growth was attributed largely to the political turmoil that engulfed the country in the first quarter coupled with a fall in farm prices and sluggish exports.
NESDB secretary-general Arkhom Termpittayapaisith said the economy showed glimmering signs of recovery in the final quarter of 2014 thanks to higher private consumption, private investment and government spending.
On the production side, almost all sectors improved, particularly manufacturing and construction, while the hotel and restaurant sectors expanded for the first time in several quarters. The Wholesale and retail trade and property sectors accelerated.
The NESDB projects the economy in 2015 is likely to expand by 3.5% to 4.5% due to supporting factors including a gradual improvement in exports in line with the recovery of the global economy, a recovery of private investment and tourism, expedited public expenditure and investment, expanding car sales and production and declining crude oil prices.
Nonetheless, it points to some risk factors and limitations. World farm prices show no clear signs of recovery, the global economic system is highly volatile, and key trading partners face currency depreciation.
Thailand's economy is likely to remain sound, with low unemployment of 0.6% and foreign reserves worth US$300 billion or 10% of GDP.
However, the inflation rate is expected to decline sharply in the first half of this year, while price conditions in the second half will have to be closely monitored.
Export value is forecast to grow by 3.5% this year, while private consumption and investment will expand by 2.9% and 6%, respectively.
Headline inflation is predicted to be within a range of zero to 1%.
"The Thai economy in 2015 is likely to gain momentum and continue to improve from the last quarter of 2014. The key contributors will come mainly from the gradual recovery of the export sector, private investment, tourism, declining oil prices and government investment," Mr Arkhom said.
He insisted Thailand had yet to see signs of deflation in which prices of goods and services fall for six months in a row, saying low inflation stemmed mainly from lower product prices in line with lower production costs due to falling oil prices.
"It's time for authorities to take into account whether to use monetary policy to boost the economy," Mr Arkhom said. "Countries such as Singapore and China have already eased their policy rates to counter low inflation."
Prime Minister Prayut Chan-o-cha, who chaired an economic ministers' meeting yesterday, has ordered the Bank of Thailand to monitor inflationary pressure and interest-rate policy closely after headline inflation shrank by 0.41% last month.
Credit Suisse economist Santitarn Sathirathai said his firm maintained its GDP growth projection of 3.7% this year, with tourism the main driver but domestic demand likely to be disappointing.
Rural households are likely to continue to be under pressure from weak rubber and rice prices and subsidy cuts. They are not fully benefiting from lower oil prices, as diesel prices have fallen less than those of petrol products.
Credit Suisse remains cautious on investment recovery. Capital expenditure in the budget is roughly flat, while disbursement has been disappointing.