The Finance Ministry's Fiscal Policy Office (FPO) has raised this year's GDP growth forecast to 5.3% from 5% on the back of solid domestic consumption, healthy private investment and big government spending.
But it cut the export growth forecast, largely due to the strengthening baht.
Director-general Somchai Sujjapongse said the positive momentum of private consumption and investment should continue, while government spending will get a boost from the 350-billion-baht water management plan.
The Bank of Thailand plans to revise up its economic growth forecast from the current 4.9% next Wednesday, while the National Economic and Social Development Board, a government think tank, is projecting 2013 GDP growth in a range of 4.5% to 5.5%.
Private consumption growth is forecast to rise to 4.6% from 3.9% in line with the nationwide increase in the daily minimum wage to 300 baht, the rice-pledging scheme and high employment, said Mr Somchai.
The corporate tax rate of 20% this year, down from 23% last year and 30% in previous years, has sparked private investment, and the FPO has narrowly raised its private investment growth forecast to 9.3% from 9.2%, he said.
The growth estimate for public investment has also risen, to 14.2% from 14%.
The FPO has trimmed its export growth projection to 9% from 10.5% as the stronger baht takes its toll on shipments.
February exports fell by 5.8% year-on-year, hampered by tepid global demand, baht appreciation and declining agriculture shipments.
The FPO expects the baht to average 29.40 to the US dollar this year.
The ascending Thai currency, which last week hit its strongest level against the dollar since being floated in July 1997, may prompt the Monetary Policy Committee (MPC) to consider cutting the policy rate, said Mr Somchai.
The MPC will meet next Wednesday.
Headline inflation is expected at a manageable rate of 3% this year, while Dubai crude oil is predicted to average US$113 a barrel.
About the author
- Writer: Wichit Chantanusornsiri
Position: Business Reporter