Reacting to a report from the National Economic and Social Development Board that the economy in the first quarter had expanded 4.3 per cent, Kosit said the growth was in line with expectations. He also said investments would give Thailand immunity in a changing world.

"The growth rate in the third quarter could be better, but it's uncertain if it will exceed 5 per cent as that depends on the recovery of private investment," he said.

"The government has spent a lot of time getting rid of investment bottlenecks and there should be a full recovery once the next government comes in."

Deputy Industry Minister Piyabutr Cholvijarn said the lifting of the ban on political activities should ease political problems.

"There should be no negative impact on the economy as in April several economic indicators showed improvement, including budget disbursement, investment and 20-per-cent growth in imports of capital goods. This shows the economy is on a positive course," Piyabutr said.

Commenting on the first-quarter growth rate, HSBC Global Research cautioned that the economic picture was not that rosy.

"The rise in fiscal consumption in the first quarter looks unlikely to be sustained for the rest of the year. In part, this can be explained by a catch-up for sluggish spending in the previous quarter, when government expenditure contracted 4.2 per cent year on year in the aftermath of the coup - the worst performance since the first quarter of 2003. Moreover, the interim government has front-loaded expenditure for the current fiscal year, suggesting that the good part has already been had."

The research house also noted that the real weakness lay in private consumption growth and investment.

Household spending rose a mere 1.3 per cent year on year in the first quarter, which is the lowest growth rate since 1999 when the country was still grappling with the consequences of the Asian crisis, the report said.

"Worryingly, construction - long surprisingly resilient in the face of political uncertainties - fell 0.2 per cent year on year, the first contraction since 2003. On balance, therefore, the surprise strength in GDP [gross domestic product] growth is due to external demand and a fiscal stimulus, while autonomous domestic demand continued to falter," the HSBC research said.

Reflecting the research house's concern was the Revenue Department's announcement yesterday that government income in the next fiscal year had been revised down from Bt1.15 trillion to Bt1.14 trillion.

Revenue Department director-general Sanit Rangnoi is confident the new target is achievable given the clearer political picture and the election set for later this year, which should improve the economic picture.

He insisted that the target still represented growth over the current fiscal year.

"It is the same amount as the target for this year, but this year our actual revenue collection could be one to two per cent lower than the target," Sanit said.