Kosit Panpiemras, the deputy prime minister for economic affairs, said yesterday he expected the economy to pick up in the third quarter.

The interim government will focus on two major tasks during the remaining seven months in office, said Kosit, who is also industry minister.

He said the first goal was to revitalise the economy by adopting an easier monetary policy and pro-growth measures. The second is to strengthen the economy in the long run.

According to Kosit, the economic slowdown has stemmed from growing concerns about the stronger baht and reduced growth in domestic consumption.

"Disbursement of the state expenditure budget has been improving, while the mega-infrastructure schemes should stimulate the economy in coming months," said the minister.

"In addition, state enterprises should speed up their combined investment budget of more than Bt200 billion, so we should see

an economic recovery around

the third quarter.

"Private investors are also ready to invest up to Bt200 billion at Map Ta Phut on the Eastern Seaboard, but we're working on solutions to environmental problems in the area.

"The Industry Ministry is also pushing for private investment in production of ecologically friendly cars which would lead to a massive investment in support industries," said Kosit.

Meanwhile, Sansern Samalapa, deputy spokesman for the former opposition Democrat Party, urged the interim government to shore up economic confidence by cutting interest rates and further postponing the increase in value-added tax.

"The Bank of Thailand's recent interest-rate cut of 25 basis points was insufficient. We need a further cut of at least 50 basis points. In addition, we need to boost economic confidence.

"For instance, domestic consumption accounts for 60 per cent of gross domestic product and if we can boost consumer confidence, then the economy would benefit greatly," he said.

Sansern also suggested the government further postpone the increase of value-added tax because the timing is inappropriate.

"Even though the government may collect an additional Bt30 billion per year by raising VAT from 7 to 8 per cent, it's not worth it since the increase will negatively affect consumption, which is a key driver of economic growth," he said.