[Tlc] FW: Thai Confidence Worst in 6-Month on Political Clashes

[Michael Montesano]

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Sent: Thursday, March 08, 2007 4:28 PM
To: Michael Montesano
Subject: Thai Confidence Worst in 6-Month on Political Clashes

Thai Confidence Worst in 6-Month on Political Clashes

By Anuchit Nguyen

     March 8 (Bloomberg) -- Thailand's consumer confidence fell to a
six-month low in February, hurt by political conflicts, terrorist
attacks and baht strength.

     An index measuring consumer confidence slipped to 73.4, falling for
a fourth straight month, from 74.2 in January, the University of the
Thai Chamber of Commerce said in Bangkok today.
The gauge measures the results of a survey of 2,235 respondents
nationwide.

     ``Consumer confidence has almost reached crisis level,''
Thanavath Phonvichai, an economist at the University of the Thai Chamber
of Commerce, told a press conference in Bangkok today. A reading below
60 would constitute a crisis of confidence, he said.

     Fourth-quarter expansion of 4.2 percent in Southeast Asia's
second-biggest economy was the slowest in almost two years and the pace
may have worsened since amid terrorist attacks, investment curbs and
political discord. The central bank has cut its key interest rate twice
this year to spur growth in the nation run by a military-backed
government since a September coup.

     Falling confidence ``reflects political uncertainties that are
unlikely to dissipate anytime soon,'' said Frederic Neumann, an
economist at HSBC Holdings Plc in Hong Kong. ``We might take a harsher
look at our GDP forecasts.''

                              Slide

     Consumer confidence has slipped in all but two months since
December 2005, after which it began sliding amid calls for the
resignation of then Prime Minister Thaksin Shinawatra, who was ousted in
the Sept. 19 coup. Confidence rebounded for two months after he was
deposed.

          Bomb blasts in three southern provinces in February killed at
least six people and injured 55. A series of bombings on Dec. 31 in
Bangkok killed three people. Prime Minister Surayud Chulanont blamed the
blasts on ``people who lost their political power'' in a Sept. 19 coup
that led to his appointment, and said the threat of attacks will
persist.

     ``The government should implement measures to shore up consumer
confidence before it falls further,'' said Thanavath.
     Central bank currency controls in December triggered the stock
market's steepest slide in 16 years. The government's tightening of
restrictions on foreign investors a month later eroded confidence
further.

                             Disputes

     Pridiyathorn Devakula cited disputes with Cabinet members as a
reason for his Feb. 28 resignation as finance minister, dealing a
further blow to the junta-backed government's credibility with
investors. Chalongphob Sussangkarn, president of a private think tank
who criticized currency controls on foreign investors, was named his
replacement yesterday.

      Exporters such as Delta Electronics Pcl (Thailand) Pcl and Thai
Union Frozen Products Pcl said 2006 profit dropped because of the baht's
strength. The currency gained 0.9 percent per dollar in February,
according to Bloomberg's data.

      Thailand's benchmark SET Index rose 0.2 percent to 671.42 as of
the 12:30 p.m. lunch break in Bangkok, after earlier gaining as much as
0.4 percent. The baht rose 0.04 percent to
35.16 to the dollar in the domestic market, according to Bloomberg data.

     Economic growth this year may cool to as little as 4 percent from 5
percent in 2006, the government said on Feb. 6. That would be the
slowest pace since 2001. Interest rates are still on a downward trend
with `slowing inflation and weak domestic demand,'' Suchada Kirakul, the
central bank assistant governor, said on Feb. 28.

                              Sales

     New vehicle sales in Southeast Asia's biggest automobile market
dropped 23 percent in January to a four-year low as consumers delayed
their purchases, Toyota Motor Corp.'s Thai unit said on Feb. 13.

     ``The Thai economy's main problem is weak confidence, which hurts
consumer spending,'' Prime Minister Surayud Chulanont told reporters in
Bangkok today. ``If the government can do something to increase
confidence, it will certainly help boost that spending.''

     Armed forces in September ousted the caretaker government of Prime
Minister Thaksin Shinawatra, saying it was tainted with corruption and
cronyism. The junta installed former army chief Surayud as prime
minister and pledged to hold elections in about October this year.

     The University of the Thai Chamber of Commerce conducts its monthly
confidence survey jointly with the Thai Chamber of Commerce, a business
organization. The results are monitored by the central bank and the
Finance Ministry to gauge consumer spending.