Tourism-consumption spur June revival

Tourism and domestic consumption rebounded in June from sharp declines in April and May, when the country was racked by political unrest, the Bank of Thailand said in its monthly briefing yesterday.

Mathee Supapongse, director of the central bank's Domestic Economy Department, said a return of confidence together with steady growth in exports and private investment led to an overall strong economy in June after it had softened during the political events of recent months.

Hotel occupancy improved in line with increased arrivals among Asian nationals from China, South Korea, Singapore and Malaysia although spending by visitors remained sluggish.

The political unrest had a severe impact on the hotel sector, particularly in Bangkok and the North. The sector had enjoyed record-high guest numbers from January to March before the protests began.

June consumption recorded robust growth thanks to record-high auto sales, continued increases in farm incomes and a high employment rate. Growth in investment was fueled by the need to expand capacity in the export sector.

"The economy has resumed its growth momentum now that the political unrest has subsided. It is expected to show strong expansion in the second quarter thanks to June's accelerated growth," said Mr Mathee.

Exports, excluding gold, reached a record high last month, totalling US$17 billion (549 billion baht), up by 42% year-on-year. Shipments were robust in all key sectors, including technological goods, farm products, autos and textiles, with orders receiving a boost from the World Cup football tournament.

Exports to all main markets increased in June, especially to Europe, while a recent Commerce Ministry survey points to continued strong export growth in the third quarter. Meanwhile, the United States' book-to-bill index stood at 1.2 last month, reflecting ongoing world demand for electronic goods, said Mr Mathee.

He said import growth was led by capital goods used in the manufacture of technological goods and automobiles. Imports of consumer goods also picked up strongly.

The central bank last week raised its growth forecast from a range of 4.3% to 5.8% to between 6% and 7.5%, reflecting the stronger-than-expected growth in the first half of the year.

The manufacturing sector grew 21% year-on-year and 5% month-on-month in June, with gains reported in both the domestic and the export-driven sectors.

A central bank business survey showed the political situation fell to third place among entrepreneurs' concerns last month after holding the top slot during the previous few months. Constraints on price increases due in part to competition topped their concerns last month, said Mr Mathee.

Farm income rose 30% from April to June, against a contraction of 9% year-on-year in the same period of 2009. The increase was driven mainly by world demand for rubber and tapioca. But rice prices decreased due to increases in global plantation areas. The government has paid 18 billion baht to 800,000 farmers since the crop price guarantee programme started in April.

Tourist arrivals totalled 950,000 last month, registering flat growth year-on-year. The full-year total for 2009 was 14 million.

Hotel occupancy stood at 37% in June, up from 34% in May but still lower than the average of 50% over the past five years. Average stays decreased to nine days last month from 10 in June 2009.

Bank lending accelerated in June because homebuyers completed transactions before government incentives expired at the end of the month.

However, Mr Mathee said the central bank found businesses faced an increasing shortage of skilled workers for manufacturing in June, including in the automotive, electronics and textile sectors.

Sourced=bangkokpost