Consumer confidence rises but may be short-lived

The University of the Thai Chamber of Commerce (UTCC) yesterday announced that the Consumer Confidence Index in October climbed for the first time in four months, to 77.8 points from 77 in September. Most sub-indices related to confidence also increased.
Increasing confidence was attributed to less concern about floods, a positive outlook on the country’s economic growth, lower fuel prices, lower interest rates, and recovered export growth in September along with expected stronger growth to come.
“However, confidence might grow only for a short period, as Thais have started to show more concern about political stability with the return of anti-government activists and expectation of rising activities late this month,” said Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre.
He said the chamber might lower its economic forecast for this year from 5.6-per-cent growth in gross domestic product given the worry over political conflict as well as concern on the global economy.
However, the chamber still projects that GDP in the final quarter of this year will grow strongly, by 13-14 per cent year on year. This is mainly due to strong growth of tourism. Next year, income from tourism is expected to reach between Bt900 billion and Bt1 trillion.
The chamber found that the index on political confidence had dropped to the lowest figure in almost two years, from 70.3 points in September to 67.1 points last month.
An index score above 100 points means high consumer confidence, while figures below 100 show weak confidence. The university surveyed 2,252 respondents across the country on their confidence in the economy in October.
Other factors that could affect consumer sentiment in the near future include the government policy to raise the minimum daily wage to Bt300 nationwide early next year, uncertainty over the global economy, particularly the euro-zone debt problem, and the expected higher cost of living next year.
The chamber has consistently opposed improving labourers’ wages. Thanavath claimed that consumers were increasingly worried that higher wages would cause some businesses to close down or lay off workers to cut costs. Goods prices are expected to increase in line with the higher cost of labour.
However, other sub-indices related to confidence went up in October.
Confidence in future income grew slightly from 94.8 points in September to 95.3 last month, while the index for future employment opportunities rose from 68.9 points to 69.8.