• 
• 

Published on September 29, 2007

Thailand's economic picture looked much rosier last month, with not only a big jump in exports, but also a growing revival in domestic demand.

Business confidence also brightened, as the Business Sentiment Index (BSI) for the three months ahead shot past the 50-point mark for the first time in six months, to 50.2.

Bank of Thailand (BOT) senior director Amara Sriphayak yesterday said private consumption and investment had picked up continuously after bottoming out in the first quarter. Businesses felt encouraged by the clearer political situation following the charter referendum, as well as by an easing of monetary controls and accelerated government spending.

Exports returned to the double-digit growth seen in the first half, reaching 18.4 per cent last month after shocking the Kingdom by turning in a dismal 6.6-per-cent performance in July.

The central bank is still preparing a report on the impact of soaring oil prices on the economy for an October 10 Monetary Policy Committee meeting. But oil prices remain below the worst-case scenario of US$76 (Bt2,600) per barrel used in the BOT's economic model, she said.

Private investment showed an upward trend, due to escalations in factory production and imports of raw materials and capital goods.

Raw-material imports soared 17.4 per cent year on year last month, compared with 6.9 per cent in July. Capital goods imports climbed 11.4 per cent after falling 0.8 per cent in July.

Producers have also been expanding their investments, as the Manufacturing Production Index stepped up to 10.2 per cent last month, from 7.5 per cent in July. The Capacity Utilisation Index edged up to 77.2, from 75 in July.

The year-on-year decline in the Private Investment Index slowed year on year to 2.8 per cent last month after 3.1 in July. But month on month, the index rose 0.9 per cent, slightly lower than July's 1-per-cent rise.

"The index has picked up steadily since the second quarter. This is a good sign, although it has advanced gradually," Amara said.

The recovery in investment is relevant to improving business confidence, because the BSI came in at 43.4, higher than July's 40.7.

The Private Consump-tion Index rose 1.4 per cent year on year last month, speeding up from a 0.1-per-cent gain in July. Month on month, the index rose 1.9 per cent after a 1-per-cent drop in July.

Amara said the index in the first two months of the second half already averaged )

 Anoma Srisukkasem

 The Nation