Thanong conceded that slower growth would continue next year because new government expenditures for fiscal 2007 would be delayed by at least six months. The political vacuum, including the lack of a sitting Parliament, prevents the government from implementing a new budget by October as required by annual budgeting regulations. Planned investments in mass transit, transport, water and energy supplies have also been put on hold.

Thanong said that public investment would jump in 2008 and 2009, boosting economic growth after two years of delays. Therefore, the average annual growth over the next three years should not be too low.

He cautioned that economic figures might not be as important as assumptions behind economic growth projections.

The Finance Ministry is expected to conclude its projection of economic scenarios for the next three years by the end of this month.

Kasikorn Research Centre yesterday revised downward its 2007 growth forecast to 3.5-4.5 per cent from 4-5 per cent based on political concerns and slowing export growth.

"Political uncertainties will be the major risk factor in the year, aside from the fluctuation in oil prices and the likely slowdown in the world economy, especially the US economy," it said in a statement released yesterday.

The centre forecast that investment growth could grow by between 0.2-3.5 per cent in 2007, down from an estimated 4.2 per cent this year.

Thanong said economic growth this year would be around 3.5 to 4 per cent, a low growth rate caused largely by delays in mega-project investment and concerns about political turmoil.

He countered an earlier projection made by Olarn Chaipravat, advisor to the Fiscal Policy Office, that 2006 GDP growth would be as low as 2 per cent in the worse case scenario. Some foreign research houses have predicted growth of 3.8 per cent.

The ministry, the Bank of Thailand and the National Economic and Social Development Board will soon meet with caretaker Deputy Prime Minister Somkid Jatusripitak to discuss the so-called "10th national plan", a roadmap for the country's economic development.

Thanong said the Finance Ministry was ready to listen to critics on how to improve good governance in the public sector. Earlier, Kosit Panpiemras, executive chairman of Bangkok Bank, warned of the possibility of an economic crisis caused by poor governance.

He said he would not sit as chairman of the Securities and Exchange Commission (SEC) so he could avoid criticism of political interference in the capital market's watchdog.

Meanwhile, the Finance Ministry will also assign Dhanarak Asset Development Co Ltd, the Treasury Department property development arm, to participate in bidding for unfinished buildings which are under the management of the Thai Asset Management Corporation (TAMC).

Caretaker Prime Minister Thaksin Shinawatra wants to make use of some unfinished buildings in Bangkok or demolish them for safety concerns.

Thanong signalled that the licenses of these buildings might be extended to pave the way for further construction if they are worthy of development. But the last word lies regulators, he said.

However, observers are concerned that property developers connected to the government might want to buy cheap buildings from the TAMC.

Wichit Chaitrong

 The Nation