Business Sentiment Confidence on Slide

The slump in confidence is a result of prolonged political uncertainty and high inflation, spurred by skyrocketing oil prices, which fuelled a rise in pro¬duction costs.

Amara Sriphayak, senior director of the Monetary Policy Group, said the sagging confi¬dence would worsen private investment in the future. Soaring inflation and political woes played a key role in investment decision making.

"The business sector projected that inflation would be higher than 6 per cent repeatedly.

It is the factor eroding business

confidence," she said.

But the senior director was optimistic private investment would improve. Imports of capital goods rose 19.7 per cent from last June, higher than the 5.4 per cent growth recorded in May.

The Private Investment Index (PII) rose 4.2 per cent onyear in June, slightly lower than 4.5 per cent in May. However, the index increased by 0.7 per cent from the previous month after contracting over the past few months.

PII in the second quarter fell 1.1 per cent from the first quarter, compared with a 0.6percent contraction in the first quarter.

Earlier, the University of the Thai Chamber of Commerce said the Consumer Confidence Index dropped to 78.0 in June, down from 78.8 in May. Consumers have been concerned about soaring retail oil prices, rising prices of goods and political uncertainty.

According to the BOT, the Private Consumption Index (PCI) in June picked up from the previous month. It registered yearonyear growth of 6.5 per cent, just up from 6.3 per cent growth in May.

PCI rose 1.2 per cent from the previous month, when the index contracted 1.9 per cent. However, the index expanded only 0.7 per cent in the second quarter, compared to 2.4 per cent in the first quar¬ter.