Public investment, exports and tourism will be the main growth engines, secretary-general Ampon Kittiampon said yesterday.

The Kasikorn Research Centre, however, predicted economic growth would be 3.4-4.5 per cent this year, due to political uncertainty resulting in lower domestic spending.

Although the economy has slowed since last year's second quarter, the state think-tank believes growth will remain at an acceptable level this year.

Gross domestic product (GDP) grew 4.2 per cent in last year's fourth quarter, compared with 4.7 per cent in the previous quarter, said the NESDB's quarterly economic report released yesterday.

Lower growth in the fourth quarter reflected a further slow-down in both investment and consumption, the report said.

Last year, GDP grew at an annual rate of 5 per cent, compared with 4.5 per cent in 2005.

Ampon said although the pace of worldwide economic growth this year would be slower than last year, Thailand should not be affected as much as some analysts had forecast.

The NESDB projected worldwide economic growth of 4.2 per cent this year, compared with 4.7 per cent last year.

Export growth for goods and services is expected to be 5.5 per cent, compared with 8.5 per cent last year.

Also, tourism is expected to expand 8 per cent this year, said Ampon.

The NESDB is apparently more optimistic than the Finance Ministry, which recently cut its economic growth forecast for this year to 4-4.5 per cent.

Ampon said new public investment was expected to be about Bt100 billion higher than last year, which would boost the economy. Private investment is expected to rise 5 per cent, compared with 3.9 per cent last year, while household consumption is predicted to expand 3.8 per cent, compared with 3.1 per cent last year. Inflationary pressure has eased, due to a fall in crude-oil prices.

"Although the oil price has risen over the last two weeks, it is still in the range of US$55 to $60 (Bt1,939 to Bt2,115) per barrel," Ampon said.

He predicted interest rates would be lowered, as the Bank of Thailand (BOT) was less worried about inflation, which is expected to be about 2.5-3 per cent this year, compared with 4.7 per cent last year. Asked whether the central bank should abolish its new capital-control requirement, Ampon said the BOT had already relaxed the 30-per-cent withholding tax on capital inflows.

Wichit Chaitrong

The Nation