Bangkok  - Thailand's economy started to recover and could achieve growth of 3.5 per cent this year if there is no more political turmoil, the government's chief economic think-tank predicted Monday.

"We forecast 3 to 3.5-per-cent economic growth on the condition that there is no more political turmoil, such as the events of April," Ampon Kitti-ampon, secretary-general of the Office of the National Economic and Social Developemnt Board (NESDB), said.

On April 13-14, there were anti-government riots in Pattaya and Bangkok, leading to an army crackdown on protestors that quickly restored peace but badly undermined investor and tourist confidence in the kingdom.

According to the NESDB's latest figures, Thailand's gross domestic product declined by 4.9 per cent year-on-year in the second quarter of 2009, compared with a 7.1-per-cent fall in the previous quarter.

The NESDB attributed the better quarterly performance to the government's 5.9-per-cent increase in spending, as part of its stimulus package.

While declines had slowed in the construction, finance and manufacturing sectors in the second quarter, the agriculture sector suffered.

Agricultural production decreased by 2.7 per cent in the second quarter compared with a 3.4-per-cent expansion in the previous quarter, mainly due to a 3.1-per-cent decline in agricultural prices compared with a 0.3-per-cent rise in the first quarter.

On the premise that politics remains calm for the remainder of the year, Ampon forecast a quick recovery in the second half of 2009.

Although most economic indicators were still in negative territory in the second quarter when compared year-on-year, the NESDB chief said there were signs of recovery.

"We're seeing more imports of raw materials, factories raising their capacity and unemployment coming down," he said.

He noted that Thai Airways International, the national carrier, had reported a 10-per-cent increase in their passenger loads in July from China and Japan and 20-per-cent increase in traffic from Europe in July.

"If there is political stability we also expect foreign direct investment to start flying in," Ampon said.

Overall investment dropped 10.1 per cent in the second quarter of the year, compared with a 15.8-per-cent decline in the first quarter. (dpa)