Low consumer sentiment to linger into 2012

In a survey of 1,113 respondents, more than 50 per cent said they would not purchase a new house, condominium, car or motorcycle next year and would cut back on travelling because of financial uncertainties in the aftermath of the floods. The poll also projected that spending of Thai consumers during the New Year festival would grow only 2.78 per cent over the same period last year to Bt91.52 billion, again blamed on the impact of the severe inundation.

Thai consumer spending will expand the least in six years. Last year, spending was up by 10.5 per cent to Bt89.04 billion.

“Normally, spending during the festival should double the overall rate of economic expansion,” Thanavath Phonvichai, director of the UTCC’s Economic and Forecasting Centre, said yesterday. “However, consumers have high concern about the money in their pockets after they faced severe losses from the flooding this year. Spending and travelling will be much lower this year.” 

Gross domestic product this year is expected to grow by just 1.4 per cent, because of a large contraction in the fourth quarter.

He said most respondents also said they would purchase in lower volumes than last year. However, since the prices of goods are higher, they must spend more money on each product they buy.

Thus Thai people would like the New Year gifts they receive from the government to be putting a priority on reducing the cost of living, followed by solving economic problems, increasing peacefulness in Thai society, and fighting corruption. 

Thanavath said consumers would continue to have gloomy sentiment for spending throughout the first and second quarters next year, while confidence and economic growth should be back to normal in the second half.

To boost consumers’ confidence, Thanavath supported the government’s plan to reduce taxes for household and car maintenance, as this would help lower people’s financial burden immediately.

UTCC vice president Saowanee Thairungroj said people would tend to spend less on luxury goods this season, while there would be an increase in spending on travel and durable goods because people must replace items damaged by the flood.

Asked where they would spend money during New Year’s, the average was 21.4 per cent for partying, followed by 17 per cent for merit-making, 12.9 per cent for clothes, 12.7 per cent for purchasing durable goods, and 8 per cent for travel.

The poll found that most people intended to travel within the country rather than go overseas. The number of travellers heading abroad dropped to 2.3 per cent from 13.9 per cent last year.