The economy grew 4.9% year-on-year in the third quarter thanks to strong exports, increased fiscal spending and a recovery in both private investment and consumption, said the National Economic and Social Development Board. The gains surprised many analysts who had been projecting more modest gains for the three-month period ending on Sept 30. Growth accelerated from a 4.3% year-on-year rate in the first quarter and 4.2% in the second.

Analysts said the latest figures could prompt the central bank's Monetary Policy Committee to leave interest rates unchanged today when it holds its last scheduled meeting of the year. The MPC's one-day repurchase rate is 3.25%.

Economic growth for the first nine months totalled 4.5% from the same period last year. The NESDB maintained its full-year growth target at 4.5%, down from 5% growth in 2006.

Agricultural production growth dipped in the third quarter to 4%, down from 7.5% in the second quarter. But expansion in non-agricultural sectors rose 5% year-on-year, up from 4% the previous quarter. Household consumption rose 1.9% year-on-year, compared with 0.8% the previous quarter, thanks to eased political concerns.

Ampon Kitti-ampon, the NESDB secretary-general, said government consumption rose 9.8% year-on-year in the third quarter, up from 9.2% in the previous quarter. Investment gained 2.6%, up from 0.2% in the second.

Mr Ampon said full-year growth was expected to be at least 4.5%, with fourth-quarter growth projected at 4.6% to 4.7% year-on-year.

The full-year target is at the top of the NESDB's former projection of 4% to 4.5% released in September. Growth projections for 2008 stand between 4% and 5%.

Mr Ampon said the Dec 23 election, the low interest rates, increases in civil service salaries and stronger business confidence would help boost growth in the last quarter of the year.

While high oil prices would continue to be a drag on the economy, robust exports, government and private consumption and a pickup in investment would help sustain expansion, he said.

The NESDB had projected 2007 Dubai oil prices at US$60 to $65. Average oil prices for the first 10 months of the year have already exceeded the target, at $66.80, and Dubai oil contracts are quoted at around $85 per barrel in Singapore.

The latest economic forecast increases the export growth projection to 16% to a value of $148.4 billion for the year, up from a September forecast of 13%, or $144.5 billion. Private investment is forecast to grow 4.5% this year from 3% earlier, while consumption is expected to grow 3.1% for the full year from a previous estimate of 2.6%.

Imports for 2007 are expected to grow 10% to $138.6 billion, up from earlier estimates of 7.5% growth to $135.4 billion. The trade balance is projected to show a surplus of $9.8 billion for the full year, with the current account surplus also revised upwards to $12 billion, or 4.9% of gross domestic product, thanks to higher tourism receipts.

Inflation was expected to remain modest for the year at 2.3%, or in the middle of the NESDB's estimate of 2% to 2.5% announced in September.

Mr Ampon said investment, mainly public, was expected to rise by 4.2% in the first quarter of 2008. Private investment was also expected to pick up, he said, noting that 580 billion baht worth of projects with Board of Investment privileges were in the pipeline.

Mr Ampon said policy changes after the election were a risk, although mass transit and grassroots development policies were unlikely to be changed.

''The mass-transit infrastructure projects have already been approved by the current government, and we're seeing signs of a recovery in investment. It's important that the new government not come and destroy these positive developments,'' he said.

Key risk factors include high oil prices, now forecast at $75 to $80 per barrel for 2008, and further appreciation of the baht against the falling dollar.

''Corporate profits are likely to be negatively affected by higher oil prices. But we see the impact of baht appreciation to be less next year than in 2007, with the baht expected to fluctuate in a more narrow range,'' Mr Ampon said.

The baht, quoted at 33.8 to the dollar yesterday, was expected to strengthen against the dollar at a slower pace than the 6% rise this year, he added.