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UPDATE 1-Thai Aug consumer confidence rises to highest in 13 months - survey
September 4, 2014 / 4:51 AM / 3 years ago

UPDATE 1-Thai Aug consumer confidence rises to highest in 13 months - survey

* Index up a 4th month, at highest since July 2013 - university survey

* Businesses say performance is improving

* Army took power in May in bid to end unrest, revive economy

* Confidence 'still not that good' - professor

By Orathai Sriring and Kitiphong Thaichareon

BANGKOK, Sept 4 (Reuters) - Consumer confidence in Thailand rose for a fourth straight month in August, suggesting consumption may improve now that three months have passed since a military coup which halted Bangkok street protests and reduced political tensions.

The consumer confidence index of the University of the Thai Chamber of Commerce rose to 80.1 in August, its highest level since July last year, from 78.2 the previous month.

Through April, the index fell 13 straight months, reaching a trough of 67.8. From November, the declines were fuelled by prolonged unrest, which battered economic activity and tourism.

"The consumer confidence index has risen steadily, especially confidence in the future economy, suggesting people still have hope," Thanavath Phonvichai, an economics professor at the university, told a briefing. "But confidence in the current economy is still not that good, weighed down by lower commodity prices."

The unrest, together with weak exports, caused Southeast Asia's second-largest economy to contract 0.1 percent in the first half from a year earlier, though it avoided a technical recession in April-June.

Exports, equal to more than half of the economy, have been sluggish this year, while imports have slumped and factory output has fallen for more than a year, showing that economic engines remain wobbly.

However, policymakers and businesses hope for a rebound in the second half as consumption and investment are expected to pick up. The Finance Ministry has forecast economic growth of 2 percent this year, while the Bank of Thailand (BOT) predicts 1.5 percent.

For next year, the national planning agency predicts economic growth of 3.5-4.5 percent, while the central bank forecasts 5.5 percent.

With the improved economic outlook, the BOT is expected to leave its policy interest rate at 2 percent for the rest of the year.

BENEFITS COMING LATER?

The military government has settled delayed payments to rice farmers and is trying to get on track long-dormant spending plans, including infrastructure projects. But the benefits are not expected until next year or later.

Private consumption rose in July from June but investment fell again, according to the central bank.

Tourism, which accounts for about 10 percent of the economy, is not back to normal yet. Foreign arrivals dropped 11 percent in July from a year earlier, an improvement from June's 24.4 percent slump.

Budget carrier Nok Airlines said on Monday rising passenger numbers mean it expects a lower net loss in the third quarter than the second, and a return to profit in October-December.

Thai hotel chain operator Central Plaza Hotel said on Wednesday net profit this year can be close to last year's 1.32 billion baht ($41 million). "Profit in the second half is expected to be slightly higher than the first's as the (political) situation has improved," senior vice-president of finance Ronnachit Mahattanapreut said.

The coup was led by Gen. Prayuth Chan-ocha, who last month was sworn in as prime minister.

$1= 32.0 baht Editing by Richard Borsuk

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