Speaking at the seminar "Thai Economic and Stock Direction in 2007 and Strategy for Stock Investment", Phatra Securities managing director Supavud Saicheua said a decline in interest rates, inflation rates and global fuel prices had pushed down costs for entrepreneurs.

This, coupled with preparation for a budget deficit, could help stimulate economic growth next year.

Supavud predicted crude prices in the global market would not surge like they had this year, when prices reached US$80 (Bt2,900) per barrel.

He said foreign investors had invested in the Thai stock market because they viewed the economic fundamentals here as strong, and stock prices remained cheap.

In particular, foreign investors did not think the Kingdom's political direction was of any concern, because a new government could be formed quickly.

"But in my opinion, the country's political direction next year remains unclear, since there is a question about whether the process of returning power to the people can be made smoothly and quickly. It needs to be monitored in the first two to three months of next year," said Supavud.

"So I still believe the economic direction is of concern. However, it is expected to improve in the second half of next year."

Somchai Pakapaswiwat, a lecturer at Thammasat University's Faculty of Political Science, said economic growth this year was driven by external factors.

In the first half, exports grew 17 per cent, while in the second half, they were expected to increase 15 per cent.

He believes economic growth next year will be driven by internal factors, including people's purchasing power and consumer confidence, which have increased due to a decline in local interest rates and fuel prices and an expectation that global crude prices will stay at $60 a barrel.

Although many expect exports to grow only 6-8 per cent next year, Somchai predicts a two-digit expansion, because the economies of major foreign partners continue to grow impressively.

"I accept there is an undercurrent in political developments. There is also a doubt that a new constitution would pave a way for a hand-over of power. That can affect the economy and the stock market," he said.