Weakening consumption has affected production as the manufacturing production index (MPI) and capacity utilisation showed slower growth. However, robust export growth could cushion the impact, the central bank said.

The Private Consumption Index for July dropped 1 per cent from the previous month to 119.9 - the third month-on-month contraction in a row. Most consumption indicators, excluding electricity usage, posted a seasonally adjusted negative growth in the month.

The 2.6-per-cent year-on-year rise in private consumption could be attributed to last year's low-base effect. The government's float of fuel prices last year dampened car sales and oil consumption.

In addition, the government's revenue from VAT and corporate tax increased slightly, indicating an economic slowdown.

Suchada Kirakul, BOT senior director, said rising oil prices had reduced purchasing power and the increasing interest rates had caused a slowdown in consumption.

"Private consumption slowed down as expected, which helps reduce inflationary pressure and bolster household savings. We can see that deposits in the banking system are rising," she said.

Passenger car sales in July dropped 2.2 per cent from June, which itself saw 9.9-per-cent contraction on the previous month, while imports of consumer goods fell 1.9 per cent following a 5.6-per-cent contraction in June.

Motorcycle sales in July fell 5 per cent from the previous month, VAT revenue was down 7.7 per cent and petrol and diesel consumption down 1.6 per cent. Only electricity continued a steady increase, going up 1.5 per cent.

The BOT forecast 3- to 4-per-cent growth in gross consumption this year.

Meanwhile, the MPI in July rose only 6.1 per cent from the same period last year, compared to 6.3-per-cent growth in June. Capacity utilisation was 73.9 per cent, down from 75.4 per cent in June.

The Business Sentiment Index (BSI) in July was 43.1, down from 43.7 in previous month and well below the critical level of 50 for the 27th straight month. However, the index for the next three months picked up from 47.9 to 49.0 in July.

Although export value in July reached a record US$11 billion (Bt413.5 billion), the trade deficit stood at $223 million. However a $500-million surplus in the service and transfer account enabled a current account surplus of $309 million. For the first seven months of the year, the current account recorded a surplus of $800 million.

Suchada said there would be a current-account surplus for the  whole year if exports shit forecast double-digit growth and imports rose slowly.

Anoma Srisukkasem

The Nation