Thailand's Fiscal Policy Office ( FPO) under the Finance Ministry has revised its economic growth estimate for 2007 downward to 4-4.5 percent from an earlier prediction of 4-5 percent owing to the private consumption and investment have not yet fully recovered.

According to Thai News Agency on Tuesday, FPO director-general Pannee Satavarodom said the revision was made on an assumption that the state agencies and enterprises must manage to disburse 93 and 85 percent of the budget as targeted earlier and the policy interest rate must be cut to a level that could stimulate local spending.

She said local economy has stabilized in 2007 as an inflation rate is expected to drop to 2.5-3 percent from 4.7 percent last year due to the oil price decline, which would lower people's living costs.

It is expected that the baht would strengthen this year as the crude oil price in Dubai would stay at an average of 54-58 U.S. dollars per barrel, down from 61.5 dollars per barrel last year.

She said the consumer confidence index dropped to 74.2, the lowest in five months, due to a concern over the New Year's Eve bombings in Bangkok.

Kanis Saengsupan, FPO's Policy Research Institute, said the private investment and consumption tended to decline. So, the government must count on the monetary and fiscal polices to stimulate the economy.

In particular, the Bank of Thailand needs to reduce the policy interest rate by a range of 0.75 percent as soon as possible.

He said it is hard to see the baht weaken because Thailand's economic fundamentals count more on exports than imports.