By Petchanet Pratruangkrai
The grim prediction follows the latest survey, which shows a Consumer Confidence Index of 68.8 points – the lowest level since November 2001. Scores below 100 indicate low confidence.
“The prolonged political deadlock and uncertain outlook for future growth have caused high concern among Thai consumers,” said Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre.
“Consumer confidence is likely to drop continuously this year as there are no positive signs there will be an end of the political mess soon.” He added that there was a high possibility of zero or even negative growth in the first quarter’s gross domestic product.
Spending on durable goods, investments and even consumer products has declined in recent months as consumers have less confidence in their future incomes, while businesses have faced lower sales.
The latest CCI survey also showed that spending confidence on new cars, new houses, travel, and starting new small and medium-sized enterprises had dropped to the lowest level in two to four years.
Based on a survey of 2,256 respondents, other confidence indices in all categories also dropped, largely to their lowest levels in 12-15 years.
Thanavath said the economy faced negative growth twice during the Asian financial crisis of the 1990s and the US-led global crisis triggered in 2007-08.
Despite major flooding in 2011, the Thai economy did not shrink, he said. But this year, GDP could shrink for the first time since then, while consumer confidence has trended downwards to the lowest point since the UTCC survey in 2000, Thanavath said.
On the expectation of lower economic growth, the UTCC estimated that the unemployment rate this year could increase from 0.7 per cent to 1 per cent.
Some 300,000 new graduates would face difficulty finding a job, it predicted.
Besides the political deadlock, other negative factors affecting confidence include the Constitutional Court ruling against the Bt2-trillion infrastructure-development project, higher domestic fuel prices and farmers’ overdue rice-subsidy payments.
Other negatives include lower consumer purchasing power, rising concerns over higher living costs, price increases for daily necessities, lower crop prices, and uncertainty over the global economy.
To promote consumer confidence, Thanavath said the political problem should be solved soon, while relevant sectors should promote the tourism and export sectors, as both could help maintain economic growth.
He said it was also important to ensure exchange-rate stability of about Bt32-Bt33 against the US dollar, and support SMEs to promote export growth.
Wachara Kuntaweethep, UTCC assistant director, said confidence for the coming six months was down to the lowest level in 15 years at 73.4 points, down from 74.7 in February.
The confidence index for the overall economy in March was 58.7, down from 59.7 in February, while the job-opportunities index fell from 65.9 to 63.6, the lowest in 28 months.
The future-income index declined to 84.9, the lowest in 15 years, from 86.3.
The downtrend is a concern as the indices reached the lowest levels since the centre started tracking the CCI in 2000. The index for Gross Domestic Happiness dropped to the lowest figure in seven years – 62.6 points – after being 72.8 points in February.
Confidence in the political situation dropped from 38.6 to 36.9.