Confidence rise could be brief

The easing of oil prices may be a temporary relief to con¬sumers, who will clearly appre¬ciate lower fuel prices. But the government's announcement on July 15 of a cut in excise taxes on fuel has been criti¬cised by many market watch¬ers as creating a potential moral hazard among con¬sumers.

While consumers are not obliged to reduce their fuel usage - and indeed could use more as prices are lower - no one can guarantee that global oil prices will be stable at the recent, lower level.

The university also men¬tioned the government's Bt46billion package of measures to help the poor cope with infla¬tion, saying this has also con¬tributed to the boost in con¬sumer confidence. But, again, this is a temporary effect.

Although lower oil prices may help increase consumption and investment, Somchai Jitsuchon, research director at the Thailand Development Research Institute, said last week that secondhalf growth in gross domestic product could be lower than that in the first six months of the year.

It will not, however "be as ugly as we'd expected earlier", he added.

Thanavath said consumer confidence could improve if political tensions ease, but this seems unlikely soon.The Supreme Court on Monday issued an arrest warrant for former prime minister Thaksin Shinawatra after he fled to the United Kingdom instead of attending a court hearing on corruption charges.

Despite the recent Cabinet reshuffle, the Samak Sundaravej government is facing several challenges, including street protests calling for the administration's resignation.