Consumers to tighten purse amid increasing worries: UTCC
Sales of new cars and houses, travel and new investment could see a drop in the second half of the year as consumers worry about the slowdown in economic growth in the remaining months of this year, according to a survey by the University of the Thai Cham
The UTCC survey shows that the consumer confidence index fell last month to 78.1 points after increasing in June to 78.6 points.
"Increasing worries about the global economic sluggishness and uncertainty over domestic political stability have started to ruin consumer confidence. The confidence could continue to drop in the remaining months and lead to hesitation in spending in the second half of the year," said Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre.
Other negative factors that will affect confidence include worries about the spreading of the EU financial crunch to other countries in the EU, the United States’ plan to announce a third round of Quantitative Easing measures to boost its economy, and the impact of a decline in exports to many markets as a result of the indirect impact of the EU crunch.
Domestic factors that will further affect confidence in the remaining months of the year include worry about a repeat of last year’s flood situation, conflict arising from amendment of the Constitution, expected rise in fuel price, and high good prices.
He said Thai economic growth this year could slow down to only 5 per cent, from the previous forecast of 5.5 per cent. Economic growth in the second quarter is expected to fall from the earlier projected growth of between 3.5-4 per cent to only 2.5-3 per cent.
The poll showed that confidence for spending on purchase of cars and houses, travel, and new investment declined to the lowest level in 13 months last month.
The index on the political situation in the next three months dropped from 75.1 points in June to 73.7 points in July due to high concerns of a future political conflict.
To boost consumer confidence in the second half of this year, Thanavath suggested that the government accelerate its budget disbursement and its investment in order to boost economic growth in the long run.
The government should promote political stability and continue to boost the domestic economy. The action plan for flood prevention and water management should also proceed to assure investors and the business sector. It should also have a plan to lessen the impact from the global economic downturn, emphasising on helping small and medium-sized enterprises.
Wachira Kuntaweethep, lecturer at the centre, said based on the UTCC survey, derived from 2,248 respondents, all indices related to consumer confidence also dropped last month.
Confidence in future income fell from 97.8 points in June to 96.8 last month, while the index for future employment opportunities dropped from 69.6 points to 69.3.
