The interim Surayud government appears to be happy with this moderate growth because it will not worsen income distribution. However, other regional economies are growing sharply. Singapore's economy, for instance, is growing by more than 7 per cent a year.

However, interest rates should not rise further for the time being. The question is, when will the Bank of Thailand cut its short-term rate of 5 per cent. For, inflation has been subdued, and the central bank has achieved its monetary-policy goal of getting the interest-rate yield into positive territory. With the prospect of lowering borrowing costs, this should bode well for businesses and consumers in general.

Oil prices are stabilising. Market speculation that the price of oil would hit US$100 (Bt3,650) a barrel earlier this year has proven wrong. But prices are unlikely to fall back to US$20-$30 per barrel. In this respect, we still have some breathing room. But the authorities must move ahead with programmes to conserve energy and boost alternative energy sources. Thailand, which depends heavily on energy imports, at 8 per cent of the GDP, can't afford to remain vulnerable to oil shocks.

The trade figures appear healthy. However, the baht phenomenon has created exceptional circumstances. Thailand experienced a trade surplus in dollar terms at $447 million in the first 10 months of this year. But in baht terms it suffered a deficit of Bt17.08 billion over the same period. This implies that we may gain more dollars after imports and exports have been offset, but we may gain less baht than we should have. The consequence would be less baht circulating in the economy.

Exporters, of course, aren't very happy with this situation. Yesterday, Santi Vilassakdanont, the chairman of the Federation of Thai Industries, complained that the baht had strengthened too sharply, outpacing other currencies in the region. The currencies of China, Malaysia, Vietnam and India - all competitors with Thailand - have risen less than 5 per cent.

Santi warned that if the baht rise continues unchecked, all industries will eventually get hurt.

Indeed, the baht has become too strong on a real effective exchange rate, or on an inflation-adjusted basis. According to a Development Bank of Singapore report, as of September this year, the real effective exchange rate of the baht was 86.4, its highest level since July 1999.

MR Pridiyathorn Devakula, the deputy prime minister and finance minister, understands the situation well. While serving as head of the Export and Import Bank and the Bank of Thailand, he advocated a policy to keep the baht competitive in order to boost exports, the engine of Thailand's economic growth.

So it would not be a surprise if the central bank were to step in to stabilise the baht. Measures have already been put in place to prevent excessive baht volatility. Going forward, the baht should not repeat its 2006 performance.

However, exporters can't wait for the authorities to come to their rescue every time. Industry permanent secretary Chakramon Phasukvanich has warned that the private sector must adapt its business by reducing production costs and increasing productivity.

This is much easier said than done. But the reality is that market forces have become increasingly more unpredictable and more difficult to cope with. The Thai economy remains relatively small in the global marketplace, so it is necessary for the authorities to manage the baht to avoid excessive volatility.

A strong baht may hurt the engine of growth, but it makes imports of oil and other goods cheaper and brings inflation under control.