ECONOMY
SOMRUEDI BANCHONGDUANG
Business confidence plunged to a five-year low as a result of soaring oil prices and domestic political uncertainty, according to the Bank of Thailand.
The central bank's business confidence index in May dropped to just 44.1, its lowest level since 2003. A score of less than 50 indicates growing pessimism about business prospects over the next three months.
Amara Sriphayak, a senior director of the Bank of Thailand's Domestic Economy Department, said the decline in confidence stemmed from three factors: rising fuel prices, inflation and political instability.
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Confidence plummeted last month as protesters under the People's Alliance for Democracy vowed to force the government to resign. The opposition Democrat Party also launched a no-confidence debate against Prime Minister Samak Sundaravej and cabinet members.
Dr Amara noted that the index had been under the normal level of 50 since March, after averaging 51 in the first quarter, up from 50.7 in the fourth quarter of 2007.
In any case, the Thai economy continued to show strong support from exports in May, with the dollar value of shipments rising 22.1% to $15.29 billion.
Imports in May rose 15.7% year-on-year to $14 billion, down from $15.39 billion the previous month. The trade account turned to a surplus of $1.26 billion in May compared with a deficit of $1.76 billion the previous month.
The current account also returned to a surplus position of $631 million in May compared with a deficit of $1.66 billion the previous month.
Private investment meanwhile continued to slow, rising 5% in May compared with 5.4% year-on-year the previous month. Private investment for the two months rose 5.2% year-on-year, compared with 7.2% growth for the first quarter.
Dr Amara said the overall figures were in line with the central bank's forecasts. The central bank currently maintains an economic growth forecast of 4.8% to 6% for 2008.
The central bank expects the current account to remain in surplus this year despite rising energy prices. Authorities maintain a current account forecast of a surplus of $4 to $7 billion, although this assumes Dubai oil prices averaging $94 per barrel compared with current prices of $135.
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