Strong agricultural growth and rising farm product prices will promote continued domestic consumption and boost Thailand's economic growth, according to the Fiscal Policy Office.
The agricultural sector is expected to grow 7 percent for the first quarter of this year, driven by higher prices for key commodities such as rice, natural rubber, sugar cane and tapioca.
Growth in the first two months of the year stood at 5.6 percent from the same period last year, said Naris Chaiyasoot, the director-general of the Fiscal Policy Office.
He estimated the sector's whole year growth rate would reach 4- 5 percent, more than double the 2 percent growth posted in 2005 when output was hurt by floods and drought.
Ekniti Nitithanprapas, chief of macroeconomic policy planning at the Fiscal Policy Office, said agricultural prices in January and February rose 27.1 percent from the same period last year.
"The trend remains positive, given that the global market continues to expand," he was quoted by Bangkok Post website as saying Thursday.
Higher commodities prices in turn has helped boost gross revenues for farmers by as much as 35.9 percent in the first two months of the year, although overall gains are significantly less given that expenses, particularly fuel and transportation costs, have also risen sharply this year.
The agriculture sector accounts for some 10 percent of Thailand 's gross domestic product, but employs as much as a third of the total workforce.
Some analysts have expressed concern that rising inflation and interest rates will lead to sluggish domestic demand and slowdown the overall economy this year.
The University of the Thai Chamber of Commerce recently forecast consumption growth in 2006 would drop to just 4 percent, with overall GDP growth of 4.5-4.6 percent.
The Finance Ministry, however, expects consumption to remain steady this year, with economic growth of 4.5-5.5 percent.