Worse, if bombs are set off for a second time in the capital, the annualised growth rate could be brought down 0.5-1 percentage points to below 4 per cent this year, said Thanawat Phonwichai, director of the university's Economic and Business Forecasting Centre.

At this moment, despite the first-quarter revision, the longer-range annualised forecast remains unchanged at 4-5 per cent.

The revision followed warnings from other economic institutions, including the Thailand Development Research Institute, which believe that the bomb blasts on New Year's Eve will pull down domestic consumption while the export sector will be hit hard by the strong baht as well as the global economic slowdown.

The rating agency Standard & Poor's also threatened to lower the Kingdom's credit rating if Bangkok suffers another bomb blast. While maintaining its credit rating despite the New Year Eve bombings, Moody's Investors Service said concerns would be heightened if the attacks prove to be an escalation of the separatist insurgency or signalled the onset of a violent backlash against the September military coup. Moody's has previously said that a sustained escalation of separatist

violence outside the southern border provinces would be a negative credit factor for the country.

 Thanawat of the UTCC said business executives were focused now on the bombing's short-term impact on the country's economic growth. The centre's poll, conducted on Wednesday and Thursday, showed that most executives believed that the situation would recover in one to three months.

However, they indicated that the violent situation would slow new investment and business expansion plans.

Nearly a quarter of the respondents - 24.6 per cent - said they were planning to expand their businesses before the bombing, a figure that fell to 1.6 per cent since the blasts.

 They said the bombs would directly hit the country's tourism industry, followed by capital investment, trading, domestic investment and foreign direct investment respectively, Thanawat said, adding that the situation should recover in the second quarter.

The chamber predicted that overseas visitors will decrease by 15 per cent to 3.45 million from 4.09 million in the first quarter. Income from the tourism sector will subsequently fall to Bt110.4 billion from Bt131.9 billion.

 Revenue from trading, particularly domestic trading, will decrease by 10 per cent.

 To increase people's confidence and raise the country's economic growth, the survey suggested that the government must "create understanding" among the public and urgently search for the bombers and their leaders.

Altogether, decreases in income from the tourism sector, domestic consumption and private-sector investment is expected to total Bt40-50 billion and cause a shrinkage of GDP growth by 0.2-0.5 per cent.

 Yajai Chuwicha, chief pollster at the university, said the southern conflict was still the top negative factor effecting the attitudes of business people, followed by rising oil prices. The third negative factor were the Bangkok bomb blasts in Bangkok.

 Due mainly to the bombings, executives have shown that their top concern for this quarter is the Kingdom's image among foreigners, followed by effects on their own businesses, on industry in general and on tourism, Yajai said.

Petchanet Pratruangkrai

The Nation