The report predicts Thai retail sales will grow by 3.5 per cent year on year to Bt543.25 billion during the second half of the year. The Kingdom's real gross domestic product is projected to grow slowly at 4.5 per cent in 2006, due to negative impacts of an upward trend in inflation and interest rates on private consumption.

This is despite the recent MasterIndex of consumer confidence for Thailand falling by 19 per cent to 28.6, its lowest point in seven years. The outlook on regular income - now 59.6 points - was the only indicator that remained in the optimistic range (a score of above 50 is positive).

In addition, the rest of the indicators have plunged by an average of 20 points.

Another 12 countries in the Asia-Pacific are also predicted to enjoy expansion, with Indonesia taking the lead with 17.5-per-cent year-on-year growth, followed by the Philippines (12 per cent) and China (11.8 per cent).

The remaining countries still foresee healthy growth in retail sales. Singapore expects to grow by 8 per cent, Malaysia by 7 per cent and Hong Kong by 5.6 per cent. Less bullish markets, including Australia and New Zealand, will grow by 4.6 per cent each, South Korea by 3.8 per cent, Taiwan by 1.6 per cent and Japan by 1.2 per cent.

Yuwa Hendrick-Wong, economic adviser to MasterCard Worldwide in the Asia-Pacific, said that despite the negative factors, continued political uncertainty and the extraordinarily low level of consumer confidence, Thai private consumption was growing due to rising incomes and a stable job market. The pace of growth of retail sales, however, is slowing.