Consumer confidence rising, but quick work by govt needed: UTCC

The UTCC survey found that the Thai Consumer Confidence Index (CCI) had improved for the fourth consecutive month in August, to 80.1 points compared with 78.2 in July. The August figure, though still below the 100-point baseline, was the highest in 13 months.

Rising consumer confidence last month was attributed to the appointment of junta leader General Prayuth Chan-ocha as prime minister and a new Cabinet, lowering of fuel prices, a positive outlook for next year’s economic expansion, the stable policy interest rate, a rising stock market, and slight appreciation of the baht.

Athough confidence is on the rise, the UTCC found consumers had high expectations on future economic growth, meaning the new government will need to stimulate disbursement of the state budget and reverse the slide of agricultural prices very quickly.

“The dropping prices of rubber and rice are major negative factors that could affect consumer confidence in the near future. The new government should urgently proceed on budget disbursement, as about Bt100 billion is still waiting in the pipeline, to promote domestic economic growth,” said Thanavath Phonvichai, director a the UTCC’s Economic and Business Forecasting Centre.

Accelerating state spending, particularly to renovate tourist attractions nationwide, should help increase people’s incomes and stimulate employment in local communities, he said. He said the price of rice was a worrisome problem because it involved a very large proportion of the population. Now that subsidies have been discontinued, the government should stabilise the rice price to ensure it does not fall below Bt8,500-Bt9,000 per tonne so that farmers can see some profit and not suffer from production losses. 

The falling price of rubber is also a problem that needs to be solved soon; otherwise, it could affect spending power for people in many regions, including the South, the North and the Northeast.

However, with politics stabilised by the military’s overthrow of the elected government, the UTCC foresees that consumer confidence will continue to rise into next year, barring serious negative factors such as a conflict between Russia and Ukraine driving up world oil prices.

The UTCC forecasts that gross domestic product will grow by 5 per cent in the final quarter of this year, resulting in full-year growth of 1.5-2 per cent. Next year, the Kingdom’s economy is expected to expand by 4-5 per cent, based on hopes of export growth between 5 and 7 per cent.

Based on the UTCC survey of 2,252 respondents, confidence in employment opportunity rose from 71.7 points to 73.6 last month, while confidence in future incomes improved from 94.6 to 96.4 points.