According to Mr Santi Vilassakdanont chairman of the Federation of Thai Industries, Thai industrial activity will slow even further in the second quarter as the impact of the global slowdown sinks in. Mr Santi said that ''Lots of negative factors that have arisen lately will be reflected in the financial results of private companies in the next quarter.”

He added that uncertainty in the world economy remains, driven by several major threats. Crude prices, which affect production costs, continue to depress the economy. In addition, the impact of the US sub prime crisis on the world economy has not yet bottomed out. Economists predict more adverse effects at least throughout the third quarter of this year.

Mr Santi said that ''The FTI's survey also shows the same thing business operators lack confidence and foresee a dimmer future.”

Amid the gloomy outlook, Mr Santi said that however, there are some bright spots. High farm prices in recent months have increased the purchasing power of farmers. Motorcycle sales are therefore expected to jump by 7% from flat growth last year. He added that passenger cars are doing even better. Some 160,000 units were sold in first quarter, a 16% rise from the same quarter last year.

Mr Adisak Rohitasune vice chairman of FTI said that ''Apart from automobiles, electronic appliances should benefit from the situation. He added that domestic car sales this year could reach 680,000 units, 50,000 units more than last year. Mr Santi said that the FTI suggested that the government control raw material prices to help curb rising production costs, adding that price caps and import taxes on steel, animal feed and petrochemical products should be considered.