"The stable economic figures and the government's [fiscal] policies indicate that the possibility of continuing economic contraction has decreased," senior director Amara Sriphayak said.
Seasonally adjusted economic figures - both on the demand and supply sides - in the first two months of the second quarter have improved from the first quarter.
The government's economic policies and rising domestic and external demand would continue to help lift the economy.
The central bank believes that the economy in the second quarter would perform better than the previous quarter but still fall short of the previous year.
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| A woman grills chicken in a Bangkok slum on June 16, 2009. Thailand's economy entered recession in the first quarter of this year as growth shrank by a bigger-than-expected 7.1 percent due to tumbling exports, the worst since the 1997 Asian financial crisis. (Getty) |
Economic risks remained from non-continuing government spending, the global economy and influenza, she said.
The Business Sentiment Index (BSI) looking ahead three months was 50.2 in May, higher than the confidence level of 50 for the first time in 15 months, according to the central bank.
Investor concerns for economic and political uncertainty as well as for the difficulty in adjusting prices were relieved. However, they are still worried about operating costs due to the rise in retail oil prices, she said.
The seasonally adjusted Manufacturing Production Index (MPI) for April-May shot up 9.1 percent from the first quarter, thanks to greater external demand. Manufacturing accounts for 40 percent of gross domestic product.
The MPI in export-oriented sectors - particularly electronics - soared 20.7 percent in April-May from the first quarter, which helped boost the Kingdom's net exports.
Exports in April-May dropped 25.9 percent on year, compared with a 19.9-per-cent drop in the first quarter, she said.
The contraction in exports and imports will continue, due to the high-base effect, but exports have already stabilised while imports of raw materials are a sign of reviving economic activity.
Domestic orders have slightly bolstered manufacturing. Imports of consumer goods reflect the gloomy mood of consumers.
The government's policy to help with the cost of living, however, gave an impetus to retail sales.
The Private Consumption Index in April-May increased by a slight 0.4 percent from the first quarter, which had retreated 4.7 percent from the fourth quarter of last year.
The index slipped 5 percent on year, compared with a 5.3-per-cent drop in the first quarter.
A sustained domestic recovery would become clearer gradually. This would encourage capacity utilisation and eventually investment expansion.
Private investment would gain momentum only when the government moved ahead with its investment projects, together with the recovery in business and consumer confidence.
The Private Investment Index in May dropped 1 percent from the previous month, compared with a 0.6-per-cent fall in April. It dropped 16.5 percent on year, compared with a 16.4-per-cent decrease in April.
Meanwhile, the government has run a cash deficit of Bt480.87 billion in the first eight months of this fiscal year, due to falling revenue and rising budget disbursement, said Somchai Sujjapongse, director-general of the Fiscal Policy Office.
Government revenue in May alone dropped sharply by 32.2 percent year-on-year to Bt114.42 billion, leaving a cash deficit of Bt47.48 billion in that month.
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