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Published on July 13, 2007

The Consumer Confidence Index has dropped slightly to its lowest level in 65 months, says the University of the Thai Chamber of Commerce (UTCC). It stood at 76.8 points last month, against 76.9 in May.

However, in the survey based on 2,243 respondents, consumers were more optimistic about future economic growth due to easing political tension, UTCC said yesterday.

Consumers were still worried about economic conditions due to high oil prices and the baht's appreciation, but they were more optimistic - the future confidence index rose to 75.1 points from 74.8 in May.

Confidence in future income also increased, from 87.1 in May to 87.4 points last month.

Thanawat Polvichai, director of the university's Economic and Business Forecasting Centre, said consumers still had limited confidence, because of the impact of the political chaos since early this year.

However, as people believe the government has a strong intention to hold a national election this year, consumers polled were more optimistic about the future economy, said Thanawat.

Other indexes related to consumer confidence decreased last month to record-low levels in five years. Consumer confidence in the overall economy decreased from 71.4 points to 71 last month, while confidence in employment opportunities fell from 72.2 to 71.9.

The university predicted further declines in the indexes until the end of the current quarter, because volatile factors will continue to affect consumer confidence.

As well as the easing political situation, other positive factors affecting future rising confidence include a decrease in domestic retail oil prices, economic growth of 4.3 per cent in the first half and strong export growth in the first five months.

However, as the baht has grown ever stronger, Thanawat said consumer confidence could continue to fall in this month's survey.

UTCC will closely monitor whether changes in baht value cause any trouble for businesses, he added.

The university also called on the government to consider cutting its policy interest rate a further 25 basis points, to relieve the burden on enterprises.

Wachira Khontaweetep, a lecturer at the university, said most respondents in the centre's survey said that now was not a suitable time to invest, travel, purchase new cars or buy new houses.

The survey also found that the index for gross domestic happiness of consumers had increased slightly last month, due to a relief in political tension.

The so-called Happiness Index increased from 97 points in May to 98.1 last month.

Petchanet Pratruangkrai

The Nation