Not only taxi drivers, but also BMW owners are filling up their tanks with liquefied petroleum gas (LPG), in a bid to reduce fuel costs. Premium petrol prices are Bt30.19 per litre, while LPG costs Bt16.81 per kilo.

Continuing political troubles have weakened support for Thailand's credit standing and if the problem is not resolved by the end of the year, the country's ratings could be threatened, Standard & Poor's Ratings Services warned yesterday.

"The expectation that current political uncertainties are temporary is of central importance," S&P credit analyst Kim Eng Tan said in a press statement. "If political uncertainty persists into 2007, then the damage to the investment climate could become long lasting, ultimately affecting even consumer spending."

Thailand's long- and short-term ratings were affirmed by S&P at "BBB+" and "A-2" with a stable outlook. The political vacuum has been cited as the cause of the present "mini crisis", according to S&P.

Tan said the country's strengths led S&P to affirm Thailand's sovereign credit ratings last April, and were in part the reason why it did not expect the country's sovereign credit ratings to be threatened in the near future.

"Among similarly rated sovereigns, recent trends in Thailand's economic performance, its fiscal flexibility, and external finance put the country ahead of most members in its peer group," he said.

"The recent change in Thailand's political environment came after a period of improvements in the country's credit fundamentals, and the current uncertainties are expected to clear up by the end of this year once a new and stable government is elected."

He noted that the current political uncertainties had affected investor confidence, which could damage economic growth over time. However, the short-term impact is moderate and reversible. An election, widely expected within six months, would resolve much of the current political uncertainty by installing a legitimate government. The damage to Thai sovereign credit fundamentals should begin to mend soon after, he added.

Foreign investment has dropped since the House was dissolved last February, and the Board of Investment has had to halve its forecast for investment expected to be approved this year for tax privileges from Bt800 billion to Bt400 billion. Some sectors have also witnessed sinking sales, reflecting sharply weakening consumer spending.

Ninnart Chaitheerapinyo, vice chairman of Toyota Motor (Thailand) Co Ltd, which has also suffered from a business slowdown, told a seminar that the political environment is the most disturbing risk factor for the country in the rest of this year.

"Interest rates and inflation are not as worrying as the political uncertainties, because they are hitting the entire world," he said.

But foreign investors' basic faith in Thailand's economic strength remains unshaken, due to strong fundamentals and its strategic location in the region, he said.

Reflecting the confidence was Nissan Motor Co Ltd's announcement yesterday that it had set up an auto-parts export base here to supply components to its manufacturing plants around the world. It was some thankful news after Seagate reportedly diverted its planned Bt40-billion project elsewhere due to the skilled labour shortage here.

Ninnart also said that finding qualified manpower for the auto industry was a headache. Toyota has approached the Japanese government to help turn out more trained personnel in Thailand, specifically to help the auto industry expand, he said.

The Asian Development Bank also said in a report released yesterday that due partly to political uncertainties, investment growth continued to ease in Thailand to 8 per cent in the first half of this year. The bank also said industrial production growth fell to 8 per cent.

While the ADB forecasts economic growth of 5.5 per cent for the Asean-region this year, the Bank of Thailand predicts that the Kingdom's gross domestic product will expand by only 4.25 per cent.