Ampon, who also serves on the Court of Directors at the Bank of Thailand (BOT), said engine imports jumped for the first time in April and May after falling into negative territory for four months.

This sends a positive signal for investment recovery, which will boost economic growth.

In March, imports of engines contracted 7.9 per cent before expanding 2.8 per cent in April, said the BOT.

Ampon said market interest rates had already reacted to the current policy interest-rate level, especially mortgage-loan rates of the Government Savings Bank and the Government Housing Bank, which are offering lending rates lower than 7 per cent. The low rate will boost the recovery of the property sector.

He is optimistic that the improving property sector will have a positive impact on related sectors, such as

electronic appliances and consumer goods.

Deputy Prime Minister Kosit Panpiemras will meet today with representatives of various industries - automobiles, electronic appliances, textiles, food and furniture - to evaluate the Kingdom's economic outlook for the second half of the year.

"He'll ask what the situation is in each industry and what they think about the economy for the next two quarters," said Ampon.

He said the government had been taking a close look at consumption with the belief that purchasing power remained high. The government believes consumption has grown at a sluggish pace because marketing strategies are not attracting consumers.

"Marketing may not be responding to customer demand. As a result, purchasing power is starting to expand but at a moderate pace," said Ampon.

Commerce Ministry permanent secretary Karun Kittisataporn said exports would grow continuously for the rest of the year, because export orders were likely to start in August. But export growth is adversely affected by the appreciation of the baht and oil price hikes. He, however, believes that the economy will pick up eventually.

"Exports at the end of the year will grow at a slower pace than last year," he said.

Kasikornbank said it would revise its economic-growth forecast for the year from 3.5-4 per cent to 4-4.5 per cent, due to high growth of exports in the past five months. But political and economic uncertainty will constrain the economy to expand not higher than 4.5 per cent.

The bank predicted the BOT would slash the policy rate 0.25 per cent at the next meeting before raising it in next year's second quarter.

Ampon said the policy rate was currently suitable for economic growth and inflation.

The authorities are currently waiting to see how the market will react to the policy-rate movement.

Anoma Srisukkasem

The Nation