He said such growth levels would create other problems, including rising unemployment and insufficient job creation to cover new graduates entering the labour force each year.

Dr Suchart, speaking at a conference on the impact of the global crisis yesterday, said the government had adopted a multi-level approach to help support growth going into 2009, starting with reassuring the public about the stability of the financial sector.

Finance Minister Suchart discussesthe impact of the ‘‘Hamburger crisis’’ on the Thai economy at a speech to the Fiscal Policy Office yesterday. NATTHITI AMPRIWAN

Exchange and interest-rate policies should be supportive of economic growth, particularly as inflationary fears had eased with the decline in oil and other commodity prices.

Fiscal measures also needed to be taken to stimulate growth, including accelerating budget disbursements and the government's infrastructure megaproject investments.

Most economists have already cut their 2009 projections as the global economy looks set to fall into a recession.

The Bank of Thailand revised its growth forecast last week for next year to a range of 3.8% to 5%, down from earlier projections of 4.3-5.8%. Gross domestic product growth is projected at between 4.3% and 5% this year.

Dr Suchart said that to further strengthen confidence in the financial system, he would hold talks with Deputy Premier Olarn Chaipravat about extending unlimited state guarantees on bank deposits for another three years. After three years, deposit insurance would then drop to eventually reach one million baht per customer per institution as outlined in the Deposit Insurance Act.

The law, passed last August, calls for a one-year grace period. Insurance coverage will then be limited to 100 million baht starting on Aug 11, 2009, and decline each year until reaching one million baht by 2012.

Dr Suchart said another measure being studied was a possible state guarantee on interbank lending if a liquidity crisis affected the local market.

"We need to take steps to protect ourselves if liquidity declines," he said, adding that this could also include delaying implementation of the Basel II capital accord for local banks.

The new capital accord will force banks to set aside additional regulatory capital to cover operational and other risks in addition to credit risk. The Bank of Thailand has already begun phasing in certain elements of the new framework, with full implementation set to take place over the next several years.

Dr Suchart said Thai exports would be the hardest hit from the global crisis, with growth in dollar terms expected to drop to 10% or lower in 2009 from an estimated 25% for this year.

The economic downturn in the US, Europe and Japan would inevitably affect export demand and put greater pressure on manufacturers to control costs and expand to new markets in Africa, Latin America, Asia and the Middle East.

Dr Suchart added that exchange rate policies should be revised to allow for a depreciation in the value of the baht to support exports.

"For every 5% decline in the baht, exports can increase by 10%. For the agricultural sector in particular, a weak baht has benefits," he said. "Many countries around the world follow similar policies to undervalue their currencies, like China."

While a weak baht would put pressure on inflation, Dr Suchart said the overall gains would outweigh the dangers for price stability.

But Tarisa Watanagase, the governor of the Bank of Thailand, insisted that the bank's long-standing policy to allow the baht to move in line with regional currencies was correct.

She said central bank intervention was aimed at limiting rate volatility. As long as rates moved with regional trends, the overall impact on price competitiveness for exports was minimised.

Setting a target for the currency was also fraught with danger.

"No country in the world uses a target for currency rates. It's very difficult to do so," Dr Tarisa said.

She added that funding costs in the Thai market were already low, so interest rate cuts would be a limited stimulus. Instead, she said, policymakers should accelerate fiscal spending, public investment and adopt policies to help the tourism sector to support growth