Renewed conflict could destroy newly regained confidence: FTI

Last month's Industrial Confidence Index hit a 43-month high, breaking the critical 100-point barrier for the first time since March 2006, thanks to increased orders from China and the recovery in the global economy, a monthly survey of 1,128 companies in 39 industrial groups showed.

The index rose to 104.3 points, from 95.9 in September. Industrial manufacturers also expect improvements in production output, sales and financial results in the next three months, following the clear recovery reflected last month.

The three-month forecast rose to 107.8 points, from 102.9 in September, confirming the National Economic and Social Development Board's opinion that the economy has bottomed out.

"Confidence among the industrial sector has been noticeably improving over the past four or five months, but I cannot say how long they can keep it up, because it depends on other factors, too," said Santi.

The survey showed manufacturers were becoming more concerned about the rising price of oil, the threat of renewed political instability and fluctuations in foreign exchange but felt more comfortable about the global economy and loan interest rates.

"We don't want to see unrest flare up again. So far, confidence has been restored not only in the manufacturing sector, but also in the tourism industry in big cities like Chiang Mai and Phuket. We don't have a problem with the red shirts staging their rallies, but they must do so in a peaceful manner," Santi said.

He said he did not oppose the government declaring a state of emergency.

"The declaration of a state of emergency won't affect business as long as there is no curfew to go along with it. On the contrary, it will make it easier for the government to control the situation if violence does break out," he added.

Vice chairman Payungsak Chartsutipol urged the government to stabilise the baht, saying the US dollar would likely grow softer.

"It's okay for the baht to become stronger, but it should not appreciate more than other regional currencies. That would cost Thai operators their competitive edge," he said.

Surapong Paisitpatnapong, spokesman for FTI's Automotive Industry Club, said it would be better if the central bank could maintain the baht's exchange rate at 35-36 to the dollar.