This year's exports could expand in a range of 17-20 per cent. "Risks continue to exist due to the global uncertainties," said Prasarn Trairatvorakul, the central bank's governor.

The BOT notes problems in the European Union and the United States, where economic growth rates are relatively low.

Prasarn said that in the new year, the Thai economy would likely be supported mainly by domestic demand, including consumption and investment. The central bank projects next year's growth in gross domestic product at 4.8 per cent.

After the floods, the country is expected to see restoration and investment in the first quarter and production running at full capacity in the third and fourth quarters, he said.

The economy could resume the level of growth seen in the middle of 2011 on expectations of closing the output gap in the second quarter, he said.

Currently, inflation remains at a high level but has not accelerated, he said.

Given the central bank's survey on businesspeople's inflation expectations, there is room to ease monetary policy to help bolster the flood-hit economy, as the Monetary Policy Committee recently did. The MPC cut the policy rate by 25 basis points to 3.25 per cent at its meeting last Wednesday.

The monetary policy-makers are keeping a close watch on all situations, Prasarn said.

"If the situations do not follow our expectations and more easing is needed, the MPC stands ready for that," he said.