Somchai Jitsuchon, a research director at the Thailand Development Research Institute, said yesterday that political chaos would increase greatly if the verdicts force all the top politicians of the Thai Rak Thai and Democrat parties to take a break from political activities, rather than only those executives directly involved in the alleged electoral fraud.

However, non-transparent political conditions will arise no matter how the verdicts go, said Somchai, who is also an adviser to the finance minister.

If the verdicts remove the current dominant players from the political field, it would lead to the parties using nominees in the upcoming general election and thus create a non-transparent political system.

But the system will not be transparent even if only some top members are forced to take a break from political activity, he added.

"I am concerned about political instability. It is a very big issue if all key party members are affected. If all of them have to get out, it will cause greater chaos than if only some of them are forced out," said Somchai.

However, he is optimistic that the conclusion of the cases will dispel the current gloomy political outlook, which would help economic analysts draw up more positive forecasts.

Bordin Unakul, executive vice president of Bangkok Bank, said he was more concerned about stability in the government's policy-making than economic stability because there might be factors that could influence policy changes.

"We have to monitor the verdict. I want everyone to evaluate the current situation using the rule of law and political science. The economy is continuing to grow pretty well, but it would be better if policies are not changed," said Bordin.

He said the economy did need a boost, but this would take time.

Sawasdi Horrungrueng, chairman of Hemaraj Land and Development, said the private sector had to continue to invest despite the current political situation, although their investments might be at a slower pace due to the uncertainty.

He said he personally disliked street-protest politics and felt that all political debate should be conducted in Parliament.

The "grey area" of whether the two big political parties will be dissolved should not drag on for too long, or else the economy will be dragged down as well, Sawasdi added.

Somporn Juangroongruangkit, president of auto-parts giant Thai Summit Group, agreed with Sawasdi that the private sector needed to invest further despite the political uncertainty. However, the auto industry is likely to grow much better if the political situation improves, he said.

Somchai said the central bank's policy interest rate could be cut further if investment and consumption remained in the doldrums, but not if domestic demand increased. At 3.5 per cent it is already low and in line with other countries in the region, he added.

Bank of Thailand Governor Tarisa Watanagase said the central bank could not evaluate the effect of the political situation in its economic model because it was difficult to forecast. But the bank is monitoring the situation and will update any information relating to the economy accordingly.

Tarisa insisted that the current policy interest rate was suitable for the economic conditions in terms of growth and stability. It has been possible to slash the rate to bolster economic growth as inflationary pressure is not a concern, she said.

"We are using monetary policy to serve the current economic environment. The economic recovery could be rapid or slow, depending on many factors," she added.

Anoma Srisukkasem,

Chalida Ekvitthayavechnukul

The Nation