Consumer confidence hits 15-month low

However, consumers have high hopes of the government’s new economic team, amid expectations that the recently announced stimulus package will boost growth in gross domestic product by 0.7-1 percentage point this year. According to a nationwide survey by the University of the Thai Chamber of Commerce (UTCC), the Consumer Confidence Index slid for the eighth consecutive month to 72.3 points in August, down from 73.4 in July, the lowest level in 15 months. A reading below 100 points reflects poor sentiment.
This is quite bad news for the retail sector, as consumers believe it is the worst time in 122 months to spend money to buy a new car or house, start a new investment or travel.
“People are greatly concerned about their incomes, as the economic outlook is not good. Many negative factors including the bomb blast in Bangkok, falling SET Index, China’s slowing growth, low crop prices, and weak exports have affected Thai sentiment seriously,” Thanavath Phonvichai, director of the university’s Economic and Business Forecasting Centre, said yesterday.
However, the government’s Bt136-billion stimulus package should strengthen economic growth by 0.7-1 percentage point, so GDP should expand by 2.5-2.9 per cent this year. Without the stimulus, Thanavath would expect the economy to grow by less than 2.5 per cent. He said the Consumer Confidence Index should bounce back or increase this month after the government’s announcement.
The UTCC estimates that the Ratchaprasong explosion caused a loss of about Bt70 billion to the Thai economy, China’s sluggishness and the yuan depreciation have caused a loss of about Bt60 billion to Thai exports, and the drought created an economic loss of about Bt30 billion to Bt40 billion. The positive factors cited in this survey were lower fuel prices and the retention of the central bank’s policy interest rate.
Wachira Kuntaweethep, assistant director of the UTCC, said that based on the 2,200 responses to the survey last month, other indices reflecting consumer confidence also continued dropping, including future incomes to 87.6 and employment opportunities to 67.6 points.
Meanwhile, the UTCC survey of 1,200 respondents indicated that 80 per cent of Thais have household debts. Of those debtors, 42.1 per cent have debt burdens with the banks and loan-sharks and 51 per cent with the underground loan system. Average household debt is Bt248,000. The reasons for Thailand’s high levels of household debt are falling incomes, rising cost of living, natural disasters or unexpected expenses, and overspending with credit cards.