Political tension saps consumer confidence: UTCC
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Rising political tension has caused the consumer confidence index to fall for the first time in five months, according to a survey by the University of the Thai Chamber of Commerce.
The UTCC poll shows that the index edged down from 77.6 points in April to 77.1 last month, the first slide since December.
The university expects consumer confidence to remain week in the second and third quarters due to uncertainty over how and when the political conflict will be resolved, while the global economic situation has also dented confidence.
“The political conflict has definitely hit confidence. Consumers feel uncertain about their future, as political conflict could destroy the country’s growth, in particular tourism, which is the major economic engine driving the Thai economy now,” Thanavath Phonvichai, director of the UTCC’s Economic and Forecasting Centre, said yesterday.
The UTCC survey showed that the index on the current political situation plunged from 76.5 points in April to 66.3 last month, which is the lowest level for a year. This shows that people are very concerned about the rising political tension.
Thanavath said inbound tourism would take over as a major economic driver, with export growth having slowed in the past four months.
To ensure the country’s growth, which the Thai Chamber of Commerce projects at 5.5-6 per cent this year, he said the government and all involved sectors should urgently seek ways to solve the current political impasse.
As political tension has been heightened by the government’s attempt to propose its reconciliation plan, it should consider suspending this agenda during the current session of Parliament and make progress on other key agenda items in order to drive the Kingdom’s growth, he added.
For instance, the government should continue pushing for a new law ahead of a review of Thailand’s status by the Financial Action Task Force on Money Laundering; otherwise, Thai businesses would face difficulties when it came to foreign financial transactions.
Based on the UTCC survey, derived from 2,241 respondents, all indexes related to consumer confidence dropped sharply last month.
Reluctant to spend
UTCC lecturer Wachira Kuntaweethep said falling confidence had led to people being reluctant to spend or invest their gains, following a period of rising spending sentiment after last year’s severe floods.
Confidence in future income fell from 97.1 points in April to 96.1 last month, while the index for future employment opportunities dropped from 68.2 points to 68.1.
The confidence index for the cost of living also dropped, from 50.7 points to 49.7, which is the lowest level in the past two years.
People are still extremely concerned about shouldering a higher cost of living. This is reflected in very weak confidence on current spending, with that particular index continuing to decline, Wachira said.
In more positive news, the Commerce Ministry announced that its survey of consumer confidence continued to increase in May as consumers still had high confidence in economic growth.
The index was up from 24.3 points in April to 27.4 points last month, the highest figure in eight months.
The ministry permanent secretary Yanyong Phuangrach said that lower fuel prices and the government’s measures to help promote farmer incomes have boosted consumer confidence.
However, some negative factors have also affected confidence, mainly rising political conflict, higher cost of living and higher public transportation costs.
