Private consumption starting to increase

Private consumption starting to increase

VAT collection jumps 11.3% in November

WICHIT CHANTANUSORNSIRI

Private consumption has picked up in recent months due to improved political confidence, according to the Fiscal Policy Office. Consumption-based value-added tax (VAT) collections grew 11.3% year-on-year in November, up from 4.5% in October. For the first 11 months of the year, VAT collections grew 4.5% year-on-year on average, down from 7.1% in 2006.

Imports of consumer goods grew 48.9% year-on-year in November, up from 42% year-on-year in October. The trend was in line with the consumer confidence index, which improved for the first time in 13 months to 69.3 from 68.6 in November. This was largely thanks to the rise in confidence ahead of the Dec 23 election and confidence in future income on plans for salary increases.

However, consumption of durable products such as cars contracted 14.9% year-on-year in November as consumers put off plans while they awaited year-end promotional campaigns.

Capital goods imports fell by 11.7% year-on-year in November from a high base last year when aircraft purchases were included. They would have grown 7.4% year-on-year if the aircraft were deducted.

Meanwhile, commercial car sales grew 5.5% year-on-year in November. It was the third consecutive month of expansion following declines in the first eights months of the year.

Construction sector indicators slowed in November, evidenced by the 3.6% year-on-year growth of property tax.

The industrial sentiment index rose to 82.3 in November to reflect improvements among large-scale companies due to increasing orders.In the first 11 months of 2007, private investment declined 0.6% year-on-year, compared with a 3.7% year-on-year contraction in 2006.

Pannee Stavarodom, director-general of the Fiscal Policy Office, said the overall economy in November was driven mainly by exports. On a customs basis, exports recorded a new high at $14.7 billion, or 24.4% year-on-year growth.

The improvement was seen across the board, particularly in automobiles, jewellery products, and agricultural and livestock products.

Mrs Pannee added that inflationary pressure would be riskier in 2008 in light of rising energy prices. Headline inflation, as measured by the consumer price index, stood at 3% year-on-year in November. It stood at 2.5% in October and 2.2% year-on-year on average in the first eleven months of 2007.

Inflation is expected to stand at 4% in 2008, assuming that oil prices average $80-85 per barrel.