Last Sunday's bombings could cut the Thai economy 0.4-0.5 percentage points in the first quarter of 2007, and the economic impact could worsen in second and third quarters if the overall situation does not improve, according to a new forecast by the University of the Thai Chamber of Commerce.

The New Year's Eve bombings which killed three persons and injured 42 others, including nine foreigners, will affect foreign investors' confidence and the tourism business, Thanawat Phonwichai, director of the university's Center for Economic and Business Forecasting, was quoted by the Thai News Agency on Saturday as saying.

He said the university had earlier forecast that the Thai economy would sustain a 4-percent growth during the first quarter of this year but it was forced to lower its projection to some 3.5 percent because of the bombings.

The tourism sector is anticipated to be affected but only in short-term as revenue from the industry is to decline by about 20 billion baht (about 556 million U.S. dollars) during the first quarter, said Thanawat, adding that the combined consumer spending and private investment are expected to fall around 20-30 billion baht (about 833 million U.S. dollars).

If the situation continues as now, the economy could worsen in the second and third quarters of 2007 and growth could fall between 0.5-1 percent from the earlier growth projection of 4-5 percent, he said.

He said the government must launch more campaigns to restore investor confidence and boost consumer spending.

Prime Minister Surayud Chulanont warned on Friday that the country should be prepared for more violence in the next one to two months.

Source: Xinhua