Survey finds first dip in confidence in 7 months

The University of the Thai Chamber of Commerce’s survey showed that last month confidence fell for the first time since September to 83.7 points from 84.8 in March; scores above 100 indicate positive confidence. 

Isara Vongkusolkij, chairman of the Board of Trade, said yesterday that the private sector wanted the Bank of Thailand and the Finance Ministry to launch measures to ensure that the baht moves in tandem with other currencies. 

“The measures should focus on preventing speculation in the baht and solving problems for small and medium-sized enterprises, as they are hit the hardest by the baht’s strength,” he said.

The Board of Trade will ask the government to instruct the Export-Import Bank of Thailand to reduce fees for SMEs so that they can access efficient financial tools. The government should support trading in local and other currencies to reduce the cost of converting funds to the US dollar. It should take steps to encourage businesses to boost their productivity and import machinery to offset the losses from the baht’s advances.

The private sector now wants to ensure that the baht will not be too strong compared with other currencies in the region, Isara said. Because of the baht’s strength, many manufacturers cannot take new foreign orders over the next couple months, so exports this year will miss the growth target of 8-9 per cent, he said.

Saowanee Thairungroj, president of the UTCC, said the BOT might not cut the policy interest rate as that might not help weaken the baht effectively.

The government could consider slapping capital controls on the bond market if it found that the market was the major problem causing the baht to rise, she said. Based on the survey of 2,246 respondents, all indices related to consumer confidence also dropped last month.

Confidence in the overall economy dipped from 75 points in March to 73.9 points. Confidence in future income softened from 102.9 to 101.8, while the index for future employment opportunities sank from 76.4 to 75.5.

Thanavath Phonvichai, director of the university’s Economic and Business Forecasting Centre, said the major problem sapping consumer confidence was the overvalued baht. 

Consumers now feel that they will be affected as the economy will be weakened.

People now feel reluctant to spend or invest their money, he said. More than half of those interviewed said it was not a suitable time to travel, start a business or purchase a car or house. 

The 20-per-cent plunge in the prices of farm goods, mainly rubber and palm fruits, also helped drag down consumer confidence, while people have started to worry about political stability, mainly because of the conflict in the deep South, the global economic meltdown and the higher cost of living.