CCI rises for first time in 7 months
RELIEF FROM the drought and rising crop prices, along with optimism for future economic growth and stabilised politics, drove consumer confidence up in July for the first time this year, according to the University of the Thai Chamber of Commerce (UTCC).
The Consumer Confidence Index (CCI) climbed from 71.6 points in June to 72.5 last month. A level below 100, however, still reflects weak consumer sentiment.
Higher confidence is good news for the retail industry, as consumers believe it is the best time in seven months to buy a new house or car or to travel, and for small and medium-sized enterprises to invest and expand their businesses.
“Higher crop prices, lower fuel prices, and a better outlook for the government’s investment and economic stimulus packages have driven consumer confidence. However, the upcoming referendum is a concern for future consumer confidence,” Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre, said yesterday.
Encouragement
He said that if the majority voted in favour of the draft constitution in this Sunday’s referendum, it should encourage people as it will ensure stabilised politics.
He added that if the referendum passes, it would increase Thais’ and foreigners’ confidence that economic growth will be stable and the military-led regime will proceed with its plan to hold an election next year. The economy will grow more strongly, while investment will increase.
However, if the majority of voters disagree with the draft constitution, Thai and foreign investors may go into “wait and see” mode. New investment or business expansion plans could be delayed as people wait for the regime to set up a new constitution drafting committee.
Thanavath said the improvement in consumer confidence last month indicated that the CCI had bottomed out and should grow in a U shape during the following months. The consumer confidence should increase strongly in the remaining months, in particular in the first quarter this year.
Based on 2,247 responses to its survey last month, the centre found that other indices reflecting consumer confidence also increased for the first time this year, including future incomes from 87.6 points in June to 88.7 points in July, and future employment opportunities from 66.5 to 67.4.
Confidence in political stability improved from 93.1 to 95.8, the second consecutive monthly increase.
Meanwhile, a poll by the UTCC indicated that spending during the long Mother’s Day weekend would increase by 3.8 per cent to Bt12.71 billion, the largest expansion in four years.
