Apr. 10--Consumer confidence plummeted to an 86-month low in March, on the back of intensifying political divisions and the Thai economy's first annual contraction in 11 years.

Thailand's Consumer Confidence Index (CCI) fell to 72.8, from 74.0 in February and 75.2 in January respectively, according to the University of the Thai Chamber of Commerce's (UTCC) monthly survey.

All confidence indices fell last month as multiple negative effects hammered domestic sentiment -- rising oil prices, surging unemployment, increasing political uncertainty, plunging exports and the weakening baht.

The index which gauges confidence in the overall economy fell to 66 from 67.2 in January, with job opportunities dropping to 65.2 from 66.5, and future income from 87.3 from 88.5.

The index ranges from 0-100, with 100 indicating healthy sentiment. The UTCC surveyed 2,242 respondents nationwide.

UTCC economist Thanavath Phonvichai said the CCI would have slipped further if the government had not distributed the 2,000-baht handouts as part of its economic stimulus measures.

However, the fiscal stimulus initiatives have yet to boost consumption.

"Thai consumer confidence is expected to slide further by another 10 points in the second and third quarter of this year," he said. "The government should accelerate rebuilding political stability, particularly through negotiations."

Thanavath warned that a House dissolution would complicate efforts to rehabilitate the economy and it would delay other relevant processes, such as the planned legal amendment to raise the public-debt cap on foreign borrowing to 60 percent of GDP from 50 percent.

"The positive effects of the government's economic stimulus measures have already passed," he said. "The government needs to speed up capital injections into the system to spur the economy, and to accelerate its investment projects ahead of the next fiscal year."

He also urged the government to slash interest rates by another 0.5 points to help ease the financial burden on the manufacturing sector and consumers. It also needs to stabilise the currency at 36 baht against the greenback to boost exports, he said.

The Bank of Thailand on Wednesday shaved interest rates to 1.25 percent from 1.5 percent -- their lowest point since July 2004.

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