Thailand's economy, Southeast Asia's second-largest, grew 3.7 percent from a year earlier in the July-September quarter, Finance Minister Thirachai Phuvanatnaranubala added in an interview with Reuters. Data on Thailand's third-quarter economic performance is scheduled to be released on Nov. 21.
He expects economic growth for the full year to be "just a little bit over 2 percent", hit hard by three months of flooding in the north, northeast and centre of the country that has killed at least 315 people, damaged large areas of farmland and closed huge industrial estates.
That forecast is down from the government's most recent projection of 3.7 percent growth this year.
The Bank of Thailand meets to review monetary policy on Wednesday and Thirachai -- who spent 26 years at the central bank and eight years in charge of Thailand's market watchdog before taking his current post in August -- said he would like to see it cut rates.
"For the Bank of Thailand to lower the interest rate would be nice because, at least for the short term, it would lower the costs for businesses," he said.
"But I don't have the authority to interfere. I only hope that the Bank of Thailand has enough common sense to judge their way forward."
The central bank has raised its policy rate to 3.50 percent from a record low of 1.25 percent in stages since July last year to cool inflation.
SPEEDY RECOVERY
Thirachai expects the economy to bounce back sharply next year, fuelled partly by aggressive spending on water-management infrastructure and other previously announced government programmes designed to stimulate domestic demand.
"We have to give full insurance to foreign investors that this can be handled better," he said, noting the government had now set up a committee headed by the Interior Minister to map out an urgent plan to improve water management in rural areas.
"We will look at what infrastructure investment needs to be made to prevent this from happening again," he said.
Earlier on Tuesday the government announced a 400 billion baht ($13 billion) budget deficit target for this fiscal year from Oct. 1, up from 350 billion baht previously, to help with the recovery from the floods.
"Our irrigation system was designed for providing water for agriculture and water for use, as well as for generating electricity. But we have to now aim more for storm drainage, managing the flood deluge. This will be a more important priority," he said.
"Global warming has made the amount of rainfall more heavy and more concentrated. This year the amount of rainfall on average was something like 30 percent more than last year," he said.
"Most of these industrial estates had walls which they tested with previous floods as being adequate but they all proved to be inadequate."
OVERSEAS BORROWING
He said he had asked the government to look into ways of changing the rotation of rice crops to reduce the risk of floods on farmland scattered across Thailand, which is the world's biggest rice exporter.
"I'm looking at instead of having three crops, we should restrict ourselves to only two, so it would last eight months, and that would leave a few months in a year so that all the area for rice growing would be ready to just hold water."
Asked if he was concerned this would reduce rice production, he said: "It may but I think it would be worth it."
He said the government was also looking into changing its road and highway systems to allow floodwater to be more easily managed, including raising some roads.
"We need to make sure we raise the roads throughout the country. If a road is designed to hold water, then it should be high enough. If it is designed just to transport goods, they should let water flow through underneath," he said, referring to some roads that form buffers to contain run-off water.
He said the government was also exploring whether to supply homes with rafts, life-jackets and portable toilets to help those who wish to remain in their homes to protect their belongings at times of future flooding.
He said the government would consider raising funds through overseas borrowing or a loan from a multilateral institution.
"To have conditions attached that ensure good governance may be a good idea. I want to make sure the projects are done with proper technical advice that usually comes with these loans. So I might have a look at those," he said of a multilateral loan.
He added that while growth would slow this year, exports remained relatively strong, likely to rise 25 percent before slowing to 15 percent next year. Headline inflation would probably be 3.8 percent this year, easing to 3.3 percent in 2012, he said.