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Published on March 20, 2008

Chairman Santi Vilassakdanont said the domestic market had remained quiet over the past two months even though most consumer confidence had been restored.

"I don't think consumers' spending has recovered from last year, because higher inflation and rising oil prices are directly affecting them," he said.

Although the country's economy is beset by many negative factors, he is positive it will improve in the next few months, because the government has clear policies for accelerating mega-projects and stimulating the grass-roots economy.

The FTI's most recent survey of manufacturer confidence showed a decline from 86 points in January to 83 last month, due mainly to falling sales and lower export orders resulting from the sub-prime mortgage crisis in the US.

"We need to follow up the impact of the sub-prime crisis on Japan, Southeast Asian and European countries. All of them could turn down our exports," he said.

He said the decision by the US Federal Reserve to cut its benchmark interest rate 75 basis points to 2.25 per cent on Tuesday concerned him, because the wider gap between the US and the Thai policy interest rates would probably lead to foreign capital flows into Thailand.

Santi urged the central bank's Monetary Policy Committee to lower its policy rate at its next meeting to close the gap but added that the committee should also remain aware of inflation.

FTI vice chairman Adisak Rohitasune said the Bank of Thailand should launch some measures to curb the baht's appreciation, so that it would not grow stronger than other currencies.

"We all know the US dollar is getting weaker and weaker, but we don't want the baht to be much stronger than other currencies. Otherwise, our exports would lose competitiveness," he said.

FTI executives will meet Prime Minister Samak Sundaravej tomorrow to discuss measures to stimulate the economy.

Chalida Ekvitthayavechnukul

The Nation