Bangkok Post

Economists are continuing to trim their growth forecasts for the year as export performance shows every sign of remaining weak.

Exports account for nearly 70% of the country's gross domestic product. Shipments to Europe make up only about 10% of exports but more worrying lately has been the economic slowdown in China, which is now Thailand's biggest market.

The Bank of Thailand on Friday said it was ready to cut interest rates to give the economy a boost, but it had to be sure that doing so would be the right move.

The overall consumer confidence index in July slipped to 68.2 points from 68.5 in June, the University of the Thai Chamber of Commerce (UTCC) reported on Friday.

The index is based on a monthly survey of 2,248 respondents in Bangkok and major provinces.

The job opportunity confidence index fell to 69.3 from 69.6 points, and confidence in future income was down to 96.8 points from 97.8 in June, said the university's Economic and Business Forecasting Centre.

An index below 100 points indicates consumers are still worried.

The centre attributed the decline in all indices to the rise in domestic retail prices of fuels, and concern about ongoing global economic weakness that has had a negative impact on Thailand.

Consumers were also worried about the political conflict over the charter change and reconciliation bills, the country’s trade deficit which exceeded US$500 million in June, and the high cost of living, it added.

The positive factors included the easing in political tension after the Constitution Court rejected challenges to the constitutional amendment plan, the central bank’s decision to keep interest rates unchanged at 2%, and the cabinet’s extension of the diesel excise tax exemption for another month.

The Bank of Thailand last week cut its growth forecast for this year to 5.7% from 6% as a global slowdown hurts exports. It has kept its key interest rate unchanged at 3% for five months.

The central bank is ready to adjust monetary policy if the global economy is weaker than expected, assistant governor Paiboon Kittisrikangwan said on Friday.

"The outlook is gloomy amid the deepening European crisis, prompting many agencies to cut growth forecasts," said Thanavath Phonvichai, an economist at the UTCC.

The university sees a 50% chance that economic growth will be between 5% and 5.5% this year.

The US dollar value of Thai expotrts slipped 4.2% in June from a year earlier, prompting the central bank to cut its export growth forecast to 7% from 8.3% last week.

Inflation quickened to a four-month high in July on higher fuel prices.

The Bank of Thailand on Friday said the economy may expand by 3.5% in the second quarter and 3.2% in the third quarter from a year earlier. Growth may accelerate to 16.7% in the fourth quarter from a year earlier, when floods forced thousands of factories to close and the economy shrank by 9%.

A deterioration in the outlook for the economies in Europe, the US and China may prompt the central bank to ease monetary policy, Mr Paiboon said at a separate briefing in Bangkok.

"We want to save the bullets," he said. "We are ready to use them if needed. Do not worry that the bullets will misfire."

The Bank of Thailand forecast a trade surplus in 2012 of $11 billion, and a current-account deficit of $400 million, he added.