The poll, conducted by the Business and Economic Forecasting Centre of the University of the Thai Chamber of Commerce, shows that business has a positive outlook towards overall economic growth this year in line with a clearer political situation. Respondents are optimistic that all negative factors have bottomed out.

However, businesses have increased their concern about rising oil prices, which have become a major factor affecting their growth. The five negative factors are political uncertainty, oil prices, a stronger baht, increasing interest rates and terrorist problems.

Centre director Thanawat Phonwichai said yesterday that the private sector had expressed a positive view about the clearer political situation, although there were still worries about whether a national election would be held this year.

"It was the first time this year that business showed less concern for the political situation. Confidence about the country's politics had dropped gradually since November last year, but now it is getting better," he said.

About 54 per cent of respondents in March said political problems should be urgently solved by the government, but the figure dropped to 30 per cent this month.

The centre also sketched two economic scenarios. First, if a wide spectrum of political resolutions takes a long time, economic growth will drop continuously until the fourth quarter and early next year. Second, if the problems are cleared in a short period, economic and private-sector confidence will recover late in the third quarter.

The poll also showed that businesses expressed less concern about a downturn in consumption. Businesses said consumer spending slumped by 51 per cent in March, but the figure rose to 10 per cent this month.

Foreign investment also increased to a better position this month. 64 per cent of respondents said foreign direct investment dropped at a high rate in March. In June, only 20 per cent said negative factors had affected foreign direct investment.

The survey, conducted from June 1-5, drew 800 responses from various sectors. Businesses still believe this year's overall economic growth will be between 3.5 and 4.5 per cent.

The poll also showed that oil-price rises are set to be a key factor hammering the Thai economy and the business sector for the remaining months. Previously, political uncertainty had been the key factor influencing the economy and business.

To increase private-sector confidence, Thanawat suggested the government stabilise the currency exchange rate to no lower than Bt36 per US dollar, decrease interest rates at commercial banks by another 0.25 to 0.5 per cent and keep oil prices below Bt27 per litre.

Petchanet Pratruangkrai

The Nation