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This was the finding of a new survey by the University of the Thai Chamber of Commerce.

"This problem will dampen the Kingdom's economic growth and create a domino effect, with a possible rise in unemployment next year," said Thanawat Polvichai, director of the university's Economic and Business Forecasting Centre.

The centre expects unemployment to reach 2.6 per cent next year, up from 1.7 per cent at present.

Thirty-seven per cent of 800 respondents surveyed from October 20-24 said they had faced difficulties obtaining bank loans, and 63.2 per cent said liquidity shortages would be evident in the fourth quarter. However, 53.4 per cent witnessed no changes in obtaining loans, while credit remained sufficient for 8.4 per cent. Only 0.7 per cent said their bank borrowing was over their limit.

To solve the problem, 86.7 per cent asked for credit in advance, held cash and kept production costs down. The university also called for more economic-stimulus measures and a cut in the policy rate by another 50-100 basis points this year.

Ekchai Nitayakasetwat, dean of NIDA Business School and advisor of Siam City Research Institute, also supported the 0.5-1 per cent rate cut to restore investor confidence, as well as the launch of mega-projects to create jobs and drive economy. 

Sukit Udomsirikul, assistant managing director of Siam City Research Institute added that Thailand has a capacity to cushion the impact of the global economic decline, given its strong economic fundamental. He added that the country's economic growth during this year to 2012 would stand between 4 per cent to 6 per cent.

Drops in both orders and revenue are forcing companies to cut their labour force. Some forecasts show between 1 million and 2 million workers could lose their jobs next year.

Ceramics manufacturers in Lampang province, experiencing a 30-per-cent drop in orders from last year's level of Bt1.8 billion, could lay off about 3,000 employees.

"Some small operators are having difficulty obtaining bank loans as lending rules become more stringent. Large operators remain, but they've cut overtime expenses and run their factories for only five days instead of six," said Lampang Federation of Thai Industries chairman Atiphum Kamthornvarin.

Yesterday, about 300 workers of the LPS Business Group and Ruanwan Business Management Co, led by Benjalak Asvakovitwong, gathered at the Labour Ministry asking for help, saying 780 workers had been laid off without compensation. Benjalak said the companies informed the workers only on Wednesday of the lay-offs without any prior notice and no mention of compensation.

Labour Minister Uraiwan Thienthong assured the crowd that the situation might not be as bad as it seemed. She urged all concerned not to panic and said the ministry had measures in place to address the situation.

Uraiwan also pointed out that demand remained for 120,000 jobs.

Thailand Development Research Institute president Nipon Poapongsakorn urged the government to use the extra Bt100 billion announced for fiscal 2009's mid-year budget to create jobs in rural provinces. The National Economic and Social Development Board, the Interior Ministry and local administrations should work together in surveying infrastructure needs across the country.

He said such projects would create jobs and benefit the economy more than would lending the money to villagers. The poor economy and higher unemployment would probably turn such lending sour, but creating jobs would alleviate the economic problems, and the rural provinces would be equipped with better infrastructure.