Floods, global slowdown dent confidence
Flooding in the North and the East and the global economic situation dragged down Thailand's Consumer Confidence Index in August after climbing for three consecutive months, according to a survey by the University of the Thai Chamber of Commerce (UTCC).
The index of consumer attitudes edged down to 83.4 points last month from 84.1 points in July, the first slide since May.
The lower confidence was partly attributed to a higher cost of living, unclear government policy on future growth, a likely domestic economic slowdown, a slide in the Stock Exchange of Thailand Index and higher interest rates.
UTCC Economic and Forecasting Centre director Thanavath Phonvichai said that although fuel prices were lower, consumer confidence remained very fragile on concerns over a rising cost of living and the global economic slowdown.
"The impact from the global economic slowdown and the sober mood of consumers could bring economic growth down from the estimated 4-4.5 per cent to 3.5-4 per cent this year," said Thanavath.
Flat growth in six giant economies - the United States, Germany, Japan, Italy, France and Britain - has created concerns about sluggishness in the global economy and could dent consumer confidence, as Thai exports will be affected.
The UTCC will revise the economic projection this month after monitoring the impact of the domestic flooding on agricultural output and people's incomes. However, it is believed that the government's spending of Bt350 billion to Bt400 billion will drive up gross domestic product by 0.3-0.5 per cent this year.
To boost confidence, Thanavath suggested that the government should provide clearer policies for boosting economic growth in the future.
Consumers have started to worry about the government's efforts to drive economic growth in the long run, as it has only announced short-term measures, he explained.
The government also must urgently deal with flooding to ensure it has a minimal impact on the economy, as people are worried about reduced purchasing power.
Saowanee Thairungroj, vice president of the UTCC's Research Division, pointed out that falling confidence had led to people feeling reluctant to spend or invest gains after their spending sentiment was up in July.
The survey showed that most indices related to consumer confidence dropped in August.
Confidence in the overall economy dipped from 74.4 points in July to 73.8 points last month. Confidence in future income fell from 102.8 in July to 102.1 last month, while the index for future employment opportunities dropped from 74.9 to 74.4.
