Slide in consumer confidence prompts calls for rate cut

There remain concerns over the economy and the cost of living. And oil prices have turned to rising, fuelling pressure on people who are afraid of spending.

“Purchasing power is expected to decline and the government may need to solve this problem through an injection in the economy,” Thanawat Polvichai, director of the University of the Thai Chamber of Commerce’s Centre for Economic and Business Forecasting, said yesterday.

The centre’s consumer confidence index fell to 79.1 in February after falling to 80.4 in January.

Other consumer confidence indices also slid: for the future to 86.4 from 87.9, for the overall economy to 68.4 from 69.7 and for finding job opportunities to 73.0 from 74.1.

All consumer confidence indices dropped after the National Economic and Social Development Board cut its target for economic growth for this year to 3.5-4.3 per cent and the price of gasoline rose by Bt2.80 per litre and the price of diesel by Bt2.30 per litre in February.

January’s exports declined 3.46 per cent in light of the expected baht appreciation, while prices of crops, including rice and rubber, continued to dive.

The NESDB said gross domestic product would expand 2.3 per cent in the fourth quarter of 2014 on the recovery of consumption and private investment.

Thanawat urged the MPC to trim its benchmark rate by 25 basis points to help weaken the baht and reduce borrowing costs as a means to stimulate the economy. The MPC meets on Wednesday.

The only positive development was the Stock Exchange of Thailand Index, which has seen upticks.

On the capital market front, Kanate Wangpaichitr, president of the Federation of Thai Capital Market Organisations (Fetco), said the three-month Fetco Nida investor sentiment index edged up 2.64 per cent to 118.64 this month on the improvement of retail investor confidence.

The individual investors’ confidence index increased 4.80 per cent to 113.86, while the confidence indices of other groups of investors declined. The foreign investors’ confidence index retreated 3.57 per cent to 116.67.

The most influential factor on the sentiment index was the situation in other countries, followed by the local economy and its related policies

The property and construction industries were the most attractive for investment for their expected gains from the government’s investment in infrastructure.

Sukit Udomsirikul, managing director of Maybank Kim Eng Securities, expects the SET Index to rise to 1,620-1,650 points this month on the European Central Bank’s commencement of its quantitative easing programme and progress in the Thai government’s mega-projects.

The first quarter of this year brings investment opportunities, while the second quarter may witness more market volatility.

The US Federal Reserve may signal a hike in its rates and that could raise investors’ concern, he added.