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July 1, 2007

Banker concerned at possible weak government
A senior banker has expressed concern that the Thai economy may weaken if the new government formed after the coming general election is not strong and demonstrations continue unabated.

Krung Thai Bank President Apisak Tantivorawong said in a recent seminar the Thai economy should improve during the fourth quarter this year in part by anticipated heavy spending in the general election, due to be held late this year, investment by state-enterprises, government spending on its budget and a cut in local interest rates.

But risks are seen, the head of the state-run bank said. The new government, expected to be weak and likely to be accompanied by continued demonstrations, could negatively impact on the economy.

An economic slowdown coupled with poor consumer confidence, will force commercial banks to tighter their loan-granting policies, said Mr. Apisak.

Bank of Thailand governor Tarisa Watanagase said current low interest rates would stimulate spending and investment, and that they should provide a major impetus to spur the economy during the second half of 2007.

On the other hand, the BoT chief suggested, if the election is held earlier that the first projected December dates, it will further boost the economy by another 0.5 per cent in 2008 compared to this year. TNA

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