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 He said consumption and investment would recover this year, following a period of public investment languishing at near-record lows.

The country's private investment has declined since 2005, while both private consumption and investment appeared to have bottomed out in the middle of last year.

"Thailand's fiscal budget for this year doesn't have heavy spending in the programme. Therefore, it's possible that the government will in mid-fiscal year boost the budget by 15 per cent from the 7 per cent currently planned," he added.

This is in line with what the Puea Pandin Party called for during its election campaign, when it said the new government should boost spending by an additional Bt80 billion.

Spencer said government and the private sector would significantly increase investment this year, supported by stronger government spending.

He expects private consumption to grow 3 per cent this year and by 4 per cent next year.

Public and private investment will grow by 4 per cent this year, he added.

Over the past two years, however, economic growth was largely driven by exports, which contributed 75 per cent of the Kingdom's gross domestic product.

Public investment and private investment contributed 7 per cent and 6 per cent respectively over the past three years.

Spencer said the Bank of Thailand was likely to cut the policy signal interest rate twice in the second and third quarter this year, as higher inflation in the first quarter will push real interest rates below zero.

The central bank decreased its policy rate by 175 basis points last year.

The higher inflation rate has been driven by rising oil prices, but the impact on food prices has slowed over the past six months.

However, he expects the price of crude to fall by 15 per cent, in line with a slowdown in global demand later this year, to perhaps as low as US$70 (Bt2,340) per barrel.

A reduction in fuel prices would benefit the economy, as when oil surges 10 per cent, it reduces GDP by 0.6 per cent.

The hike in oil prices has a similar impact on Indonesia, Malaysia, Singapore and the Philippines by 0.2 per cent, 0.25 per cent, 0.5 and 0.55 per cent, respectively, he added.

Somruedi Banchongduang, The Nation