However, they accept that their businesses will record slower growth than last year.

The Thai Industries' Sentiment Index made a strong recovery last month on the back of more orders and lower interest rates after plunging to a five-year low in April, the federation said. The index rose to 86.1 last month, from 77 in April.

FTI vice chairman Adisak Rohitasune said operators were showing higher confidence, despite the country's political and economic situation, because of more orders from customers abroad, while benefiting from lower interest rates at home.

"If the index continues to rise, this will indicate an economic recovery in the second half [of the year]," he said. "However, as the index still stands below the 100-point level, it still shows that manufacturers' confidence in their industries is not too strong."

Calculation of the index followed a survey of 478 manufacturing companies in 35 industrial sectors.

Adisak said the government's accelerated spending and lower interest rates had played an important part in boosting operators' confidence. However, many are still concerned about the cloudy political situation, the unstable exchange rate and oil-price hikes.

The DBS Group yesterday said in a research paper that if the Election Commission were prepared to hold a referendum on the draft constitution on or before August 19, with an early exit by both the military and the interim government amid a restoration of democracy, that would no doubt be positive for the economy.

"Until then, however, we still need to watch developments. If the referendum takes place before September as scheduled, and the draft constitution is approved, then chances are the election will be held earlier than initially planned.

"This would improve consumer and investor confidence and hence private consumption and investment, which contracted 0.5 per cent and 3.9 per cent, respectively, year on year during this year's first quarter," DBS said.

Chalida     Ekvitthayavechnukul

The Nation