Thailand's economic growth is expected to improve, driven by people's confidence and public investment, but recovery will be uneven across sectors, say policymakers.
The central bank's Monetary Policy Committee (MPC) still projects recovery momentum to be moderate but the rebound is not expected to dissipate into every economic sector as the drought has taken a toll on the rural economy, governor Veerathai Santiprabhob said.
"We have to continue monitoring [economic] signals in the coming period and there will be greater clarity on first-quarter growth announced by the National Economic and Social Development Board (NESDB) on Monday," he said.
Deputy Prime Minister Somkid Jatusripitak earlier said the economy was estimated to expand by 2.8-2.9% year-on-year in the first quarter, with tourism and government spending as key growth drivers, while the Fiscal Policy Office and Bank of Thailand offered even rosier forecasts of 3%.
The economy grew by 2.8% year-on-year and 0.8% quarter-on-quarter on a seasonally adjusted basis in the fourth quarter of 2015, according to the NESDB.
Mr Veerathai insisted the foreign exchange rate would not be the MPC's focus in conducting its monetary policy and said the central bank had not used foreign exchange to enhance competitiveness in terms of export value.
The central bank has managed foreign exchange to facilitate Thailand's economic recovery but there is no policy to target a particular range of foreign exchange rate, he said.
The MPC kept its 1.5% policy interest rate unchanged on Wednesday and maintained this year's GDP growth forecast at 3.1%, but it voiced concerns over heightening internal downside risks that could derail private consumption and investment.
Mr Somkid said the jubilant atmosphere at the Money Expo 2016 event being held at Muang Thong Thani's Impact Arena reflects people's sentiment that the economy will improve continuously.
But such a positive outlook also depends on people's perceptions and willingness to withstand economic conditions without putting too much emphasis on pessimistic views, he said.
"We have to look forward in spite of obstacles. People's confidence and public investment are supporting factors [for the improved growth trajectory]," said Mr Somkid.
He cited how Thailand has re-entered the top 25 of the A.T. Kearney Foreign Direct Investment Confidence Index after a two-year absence, ranking 21st, as an indication of confidence in the country among global investors.
Despite uncertainties derived from changes in domestic politics, the index demonstrates that the government is open for investment, particularly through incentives offered by the Board of Investment, said Mr Somkid.
Thailand's neighbouring countries have also registered continuous economic growth annually, making Thailand a channel for disbursing investments throughout the region, he added.
It is expected that the government will allocate a budget of 15 billion baht this year for the digital economy initiative, while 5 billion baht will be used to develop Thailand's international internet gateway in 2017, he said.
The University of the Thai Chamber of Commerce yesterday cut its economic growth forecast from 3.5% to 3% this year.
Thanavath Phonvichai, vice-president for research, cited the slow pace of the world's economic recovery, poor exports and widespread drought.
The new forecast was based on the world's growth projection of 3.2%, an exchange rate of 34.99 baht per dollar, Dubai crude oil prices at $39.50 per barrel and 32.87 million tourist arrivals.
The university cut its export growth projection to only 0-0.8% from 2% forecast previously.
"Poor global economic prospects are likely to continue putting pressure on Thailand's exports, while private consumption is experiencing a slowdown due mainly to the impact of longer-than-expected drought conditions and low farm product prices that have drastically hit farmers' income," Mr Thanavath said.