New wells are to be drilled in affected rural areas of Thailand

"It will have an impact on GDP growth. The drought is extremely severe this year. If the May rains arrive late we could see greater damage," he said.

The drought is hitting most of the country - with water in many dams declining significantly.

The drought hit fourth quarter economic results by significantly affecting output in the agricultural sector.

The prime minister said the government remained hopeful the economy would grow by 6.5% in 2005 after 6.1% growth in 2004.

The country cut its economic growth forecast in December to account for the effect of the tsunami, which hit six Thai tourist provinces.

Disaster zones

Hopes for a second rice-crop this year have been frustrated by the drought, and crops have been withering in fields.

The agriculture sector, accounted for 9.2% of Thai GDP in 2004.

The drought has hit rice crops

The National Economic and Social Development Board, a state planning agency, said the sector would contract again in 2005, as happened last year.

The drought has hit 70 of Thailand's 76 provinces and affected 8.3 million people.

On Friday, 10 areas in the northern Thai province of Chiang Mai were declared disaster zones, with emergency assistance granted to relieve the hardship of farmers and fishermen.

As many as 6,000 new wells are being drilled in rural areas to provide temporary relief.

Region hit

Water at hydro-electric dams has fallen close to the minimum needed to produce electricity, government officials said.

The military is on standby to carry out cloud-seeding in an effort to stimulate rain in the areas worst hit.

The drought is affecting other countries in south-east Asia and Cambodia has put out a call for international assistance.

Cambodia is suffering its second year of drought, with the Mekong River water levels dropping below normal levels, and many farmers expect to lose their crops.

Vietnam's eight Central Highlands provinces are suffering their worst drought in 28 years, affecting 1 million people and causing millions of pounds worth of crop losses.

Officials say Vietnam's coffee industry, the second largest in the world, is threatened as the main bean-producing region is one of the hardest hit.