GDP growth for next year had earlier been forecast at 3.9 per cent.

The Finance Ministry said an economic slowdown continued last month by most indicators but that it was upbeat about the economic outlook next year.

Finance Ministry spokesman Somchai Sujjapongse said the ministry would revive its economic projects for next year, because growth was expected to be more than 4 per cent, compared with the previous projection of 3.9 per cent.

This is in line with Bank of Thailand (BOT) board member Ampon Kittiampon, who said yesterday private investment would improve next year, due to faster-than-expected disbursement of the budget and the ruling military body's policy of accelerating state enterprises' investments.

Ampon, also secretary-general of the National Economic and Social Development Board (NESDB), said the NESDB still maintained an economic growth forecast for next year of 4-5 per cent, because it needed to collect more information. But he said the economy could possibly grow 4.5 per cent this year, compared with the NESDB forecast of 4.2-4.7 per cent.

He said pressure to raise interest rates had declined as oil prices decreased along with inflation. This will boost household income.

BOT board member Naris Chaiyasoot agreed the economic growth rate next year would be higher than expected, due to accelerated budget disbursement, but the ministry still kept its forecast revenues for next year intact. He said the size of the deficit depended on the new government.

Somchai said early disbursement of the fiscal 2007 budget would boost growth next year, thanks to the military coup, which should see the budget implemented more quickly than earlier projected.

He said the ministry yesterday released a monthly economic monitoring report that suggested a continued economic slowdown last month. Household consumption decelerated further.

Value-added tax collection, an indicator of consumption, expanded 9.1 per cent last month, compared with growth of 13.9 per cent in July, said Somchai. Imports of consumer products in US-dollar values also pointed to a deceleration, expanding 14.7 per cent last month compared with 23.1 per cent the month before.

Private investment last month also disappointed the Finance Ministry. Tax levied on transactions of real estate sank 11.5 per cent, compared with growth of 5.6 per cent in July. The figure indicated a slump in the property sector, hard hit by high oil prices, political uncertainty and rising interest rates.

The import of capital goods contracted 0.1 per cent last month, compared with growth of 14.5 per cent in July. However, if the import value of aircraft were cut from last year's figures, the import of capital goods last month expanded 5.4 per cent on year, said Somchai. The import of aircraft in August of last year resulted in an unusually high import of capital goods.

Export earnings last month continued to shore up the economy from a sharp drop. Export value increased 16.8 per cent to US$11.86 billion (Bt446 billion) against imports worth $11.53 billion.

The fundamentals of the economy remained sound, as official reserves stood at $59.4 billion, three times higher than short-term debts, while headline inflation decelerated to 3.8 per cent, from 4.4 per cent in July. Core inflation, excluding energy and food, expanded 1.9 per cent, a deceleration from July's 2 per cent. And the unemployment rate was at a low of 1.4 per cent last month.

Meanwhile, BOT assistant governor Nitaya Pibulratanagit said the baht was not affected by the Chinese yuan's appreciation but rather had slightly depreciated from the rate before the coup.

"I understand it will move with stability at this level," she said.

Wichit Chaitrong,

Anoma Srisukkasem

The Nation