Earlier, the National Economic and Social Development Board (NESDB) said it would launch a stimulus packages to boost economic growth.

MR Pridiyathorn Devakula said the growth of private investment in real terms has been 8 per cent, higher than economic growth. Private consumption in real terms has continuously risen by 4 per cent and export growth also has a satisfactory record. This indicates that the private sector has maintained its ability to conduct business.

"They can run their businesses consistently by themselves but it remains to be seen whether the government will have other measures to bolster public spending," he said.

The government should restore investor confidence adversely affected by skyrocketing oil prices, currently the highest risk factor for the business sector. Investors want stable oil prices in order to know exactly what their cost of production will be, Pridiyathorn said.

The governor said it was difficult to conclude that the political vacuum has had a negative impact on investment. But the investors should be patient in waiting for upcoming political stability.

"Democracy has to take time to settle. We cannot accelerate the political process, but just do the best we can now," said the governor.

He said the delay in the government budget for the next fiscal year would not affect the economy until October when the disbursement was supposed to start. The government can rely on current and carry-over budget balances to boost the economy.

Meanwhile, in a separate development, BOT deputy governor Bandid Nijathaworn affirmed yesterday that the central bank's priority remains to maintain the country's economic stability. Inflation and foreign exchange will be controlled in a way that does not damage the momentum of economic growth. He said that the second and third quarters would be a time for adjustment before inflation starts normalising in the fourth quarter, which would lead to more domestic consumption.

According to Bandid, the Thai economy has grown well with exports posting 17.9 per cent growth in the first quarter of the year. Investment growth in the first quarter dropped to 1.4 per cent from 5 per cent in the fourth quarter of 2005, with the construction industry declining the most.

The BOT says that over the past 10 years the private sector has been the key factor driving the economy. It also predicts that the economy will remain stable with the trend of inflation starting to decline.

Anoma Srisukkasem

The Nation