THAILAND

The economy grew steadily in July, driven by growing confidence and steady exports, the Bank of Thailand said in its latest economic assessment.

The central bank said optimism about future economic trends led to an increase in private investment in export-related sectors for capacity expansion and the construction sector.

A surge in global farm prices due to world demand and a supply shortage, as well as improvement in the Stock Exchange of Thailand's performance resulted in higher consumer purchasing power in July. Advance bookings for automobile sales point to future strong consumer spending.

"Domestic demand has improved and this should compensate for the expected decline in exports in the future," said Mathee Supapongse, director for the Domestic Economy Department.

"Meanwhile, private investment has grown steadily, even with the riots."

The marathon demonstration by red-shirt protesters from March to May in Bangkok severely rocked tourism businesses. In July, tourist numbers returned to levels close to before the global recession, mainly from China and Asean. Visitors were fond of the South, as they avoided Bangkok and northern regions for fear of political violence.

"Hotel occupancy continued to improve in July, but it remained below the average of the past five years. Hotel operators introduced promotions to attract tourists, but they resulted in lacklustre revenue," Mr Mathee said.

Exports grew 21% year-on-year in July to $15.4 billion, close to previous months. Gold accounted for $25 million in exports. Imports excluding gold totalled $1.4 billion, resulting in a small surplus in the trade account for July.

Mr Mathee said export growth was expected to slow after recording 40% year-on-year gains earlier this year.

"Confidence in exports remains strong into 2011. The three-month advanced order index is poised to increase. The book-to-bill ratio of electronic parts showed that there is a positive trend in demand."

GDP for the second quarter defied predictions of a severe contraction from the first quarter's 12% rise, with healthy 9% year-on-year growth.

Mr Mathee said the July economy slowed from a few months earlier because of base effects, but monthly growth has been steady. The central bank expect full-year economic growth of 6.5% to 7.5%.

In July, the manufacturing sector weighed down economic output in light of factory maintenance and accelerated production in previous months.

Tourist arrivals for July stood at 1.26 million, a 15% increase year-on-year from 950,000, but flat growth from June. Hotel occupancy stood at 47% in July. The southern region recorded 53% occupancy in July, compared to 48% in the same period last year.

Crop prices grew 45% year-on-year in July, and production 1% year-on-year. Palm oil and rubber price increases led to higher production.