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Published on October 27, 2007

Private companies and households increased their spending between July and September, said Pannee Sathavarodom, director-general of the office at the Finance Ministry.

Consumption is recovering, as revealed by several indicators. According to the monthly economic report, collection of value-added tax in real terms expanded by 3.1 per cent year on year compared with 0.7-per-cent growth in the previous quarter. Sales of cars also increased by 2.3 per cent year on year, compared with a sales drop in the three previous consecutive quarters. Car sales in September, however, dropped by 2.1 per cent.

Sales of motorcycles still faced a decline of 23.2 per cent, following a sales contraction for four consecutive quarters. This indicated that consumption is recovering in bigger cities but remains weak in rural areas.

Imports of consumer goods in terms of volume rose by 17.6 per cent, compared with a growth rate of 17.5 per cent in the second quarter.

The Consumer Confidence Index in the third quarter was 69.7, suggesting confidence remained weak.

Indicators of private investment also improved in the past quarter. Imports of capital goods in terms of volume expanded 2.7 per cent year on year, compared with a growth rate of 1.5 per cent in the second quarter. Sales of commercial vehicles rose 3.8 per cent after contracting for five quarters in a row. Collection of specific business taxes from property transactions rose 5.2 per cent after a contraction for four consecutive quarters. The Investor Confidence Index was 76.6 in the third quarter and 81 in September.

Government spending also played a key role in boosting the economy in the past quarter, as public spending expanded 17.5 per cent year on year.

However, export growth decelerated in the third quarter. Exports by volume rose 6.7 per cent year on year, compared with 13.2 per cent in the second quarter.

Economic stability remained strong, as the current-account surplus was US$1.1 billion (Bt37.55 billion) in the past quarter. Headline inflation was 1.6 per cent, compared with 1.9 per cent in the second quarter. Higher oil prices caused higher inflation, but the effect was minimal, she added.

Pannee was optimistic that private investment and consumption would further increase in this fourth quarter and next year due to increasing political stability.

 Wichit Chaitrong

 The Nation