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Published on September 14, 2007

Last month's Consumer Confidence Index slid to 75.7 points, from 75.8 in July, marking the 10th straight fall and a 65-month low, due to baht and economic concerns.

However, consumers appear more optimistic looking forward, as a new constitution is in place and a general election is scheduled within this year, Thanawat Polvichai, director of the Economic and Business Forecasting Centre at the University of the Thai Chamber of Commerce (UTCC), said yesterday.

In its monthly survey results, based on 2,256 respondents, the Future Confidence Index rose to 74.4 points, from 74 in July. Confidence in future income also increased, from 86.6 points in July to 87.1 last month.

Other indexes fell last month to lows not seen in more than five years. Consumer confidence in the overall economy dipped from 70 points to 69.5, while confidence in employment opportunities retreated from 70.8 points in July to 70.5 last month.

A reading below 100 points indicates economic pessimism.

"The government's strong intention to hold a national election this year has consumers upbeat about a brighter economy. However, consumers still have limited confidence, which could be easily hit by any factor," Thanawat said.

Possible risks facing the economy are fallout from the US credit woes, oil prices in the first quarter rising past US$85 (Bt2,900) per barrel and postponement of the national election.

He called on the government to accelerate mega-project investment, stabilise the baht at 34-35 to the US dollar and keep its word to hold the election on December 23.

UTCC vice president Saowanee Thairungroj said most people believed now was not a good time to invest, travel or purchase new cars or homes.

The survey also found the Gross Domestic Happiness Index for consumers went up slightly last month, thanks to the easing of political tensions. It rose from 97.1 points in July to 98.2.

Consumers are also more bullish on future happiness, as the index for the next three months moved up to 100.8 points.

The property industry expects flat sales this year, said Prasong Owlarn, chairman of the UTCC Real Estate Development Committee.

"Although I had expected the sector to grow 5 per cent, declining consumer confidence has caused property sales to drop 10 per cent in the first half," he said.

Last year, residential sales reached 78,000 units worth a total of Bt200 billion, but the average price has declined from Bt3 million  last year to Bt2.2 million this month.

However, the real-estate industry should recover in the fourth quarter after consumers gain greater confidence in future economic growth, he said, adding that the home-loan troubles of the United States should not undermine the property business here.

Petchanet Pratruangkrai

 The Nation