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* University's index at highest level since October
* Military govt's moves are reviving confidence - professor
* Spending in provinces still weak, economic problems remain
By Kitiphong Thaichareon and Orathai Sriring
BANGKOK, July 3 A university's index of consumer
confidence in Thailand jumped in June, pointing to a possible
improvement in domestic demand after the army took power and
promised to revitalise a stumbling economy.
The consumer confidence index of the University
of the Thai Chamber of Commerce rose to 75.1 in June, from 70.7
The latest reading is the highest since October. Through
April, the index fell 13 straight months, and from November,
political tensions were a major factor in the steady decline, as
protests and unrest hurt tourism and demand.
The June survey is the first that covers a full month
following the May 22 coup the military said was necessary to
restore order and get the economy moving. The previous survey -
which showed the index rising to 70.7 from 67.8 - was conducted
right after the coup.
"The confidence index clearly improved in June as the
political situation was more stable and people believed the
military government's measures would help revive the economy,"
Thanavath Phonvichai, an economics professor at the university
told a briefing.
"People are happy, so we believe spending on expensive goods
such as cars and houses will return," he said.
Thanavath said that next year, "if there is not any problem,
consumer confidence is expected to rise."
Southeast Asia's second-largest economy shrank 2.1 percent
in January-March from the previous three months. Exports, which
account for more than half of the Thai economy, have long been
weak. Some economists say growth won't pick up significantly
until exports do.
Government economic data for June, other than for
inflation, hasn't been reported yet. May data remained weak.
Exports were 2.14 percent lower than a year earlier, according
to the Commerce Ministry, and factory output - down for 14
straight months - declined 4.1 percent.
Analysts believe the military's intervention may have put a
floor under the country's deteriorating conditions and shored up
consumer confidence by defusing the threat of an escalation in
political violence, but mending its deep-rooted political and
economic malaise will take time.
The Bank of Thailand (BOT) recently slashed its 2014
economic growth forecast by nearly half to 1.5 percent, but it
predicted growth of more than 1 percent in April-June from the
previous three months, meaning there would not be a technical
For next year, the central bank raised its growth estimate
to 5.5 percent because political tensions have eased and there
is a functioning government. In 2013, Thailand's economy
expanded 2.9 percent.
In line with the university survey's finding, some Bangkok
residents say are more optimistic about the economy.
"Sales are quite good," said Jintana Saetiew, a 52-year-old
street vendor who sells beverages. "I'm selling 20-30 percent
more, compared with during the unrest. I hope things will get
better and better."
PAYMENT TO FARMERS
Sujitra Kipairote, a 28-year-old reporter, said she was more
relaxed than previously. "I spend more. I think the junta's
policies should help improve the economy in the second half,"
The junta quickly paid about 92 billion baht ($2.8 billion)
owned to hundreds of thousands of farmers under a controversial
rice-buying scheme. It has outlined economic measures such as
price caps on fuel and loan guarantee to help small firms to
help get the economy going.
Tourism arrivals were down by 6 percent in the first five
months of this year, but industry executives say they expect an
improvement in the second half. Tourism accounts for about 10
percent of the economy.
Other economic problems remain. Exports are sluggish and
Thai households are among the most indebted in Asia, which
leaves the central bank little scope to cut rates to support
Thanavath said that while demand in Bangkok is improving,
"there has been still little spending in the provinces, partly
because some rice payments are used to repay debts, while the
prices of rice and rubber are falling."
(Editing by Richard Borsuk)