April 10, 2024
Thailand’s Consumer Confidence Index fell for the first time in eight months in March, due to a gradual rise in oil prices and lower-than-expected agricultural productivity, according to the Center for Economic and Business Forecasting, the University of the Thai Chamber of Commerce (UTCC).
Speaking at a monthly press conference on Wednesday, UTCC director Thanawat Polvichai said the results reflected poorer than expected outcomes for factors affecting Thailand’s overall economy.
He clarified that while most people’s incomes stayed the same, high oil prices raised the cost of living.
Regarding low crop production, he said the scenario indicates lower income for Thai farmers who experienced productivity losses due to severe drought caused by El Niño, leaving them unable to benefit from growing international agricultural prices.
Thai farmers account for a significant portion of the country’s purchasing power.
The survey results showed that the majority of Thais had been cautious in their spending.
Meanwhile, the delay in approval of Thailand’s 2024 national budget also slowed growth and lowered confidence as there was no government spending to stimulate the economy.
Despite the fact that approximately 10 million tourists visited the country during the first three months, boosting customer trust in Thailand’s economy, the majority of them remained concentrated in major tourist destinations in major cities rather than in secondary provinces. Thus, the income distribution is unequal, he said.
Hence, the vast majority of Thais are unable to benefit from tourism, forcing them to be prudent with their spending.
According to the UTCC’s March Consumer Confidence Index, the figure fell from 63.8 in February to 63.0 in March, marking the first decline since August 2023.
The report also showed that confidence in the overall economy, job opportunities, and future income had decreased to 56.9, 59.8, and 72.2, respectively. The number fell for the first time in eight months as well.
Looking ahead, Thanawat emphasised the urgent need for the government and related agencies to heavily promote secondary cities, implement systematic water management using big data and some technology to increase farmer productivity, and find practical measures to combat PM2.5 air pollution, which threatens the country’s tourism industry.
Aside from some negative factors that may undermine consumer confidence, he believes that the index will rise significantly over the rest of the year. It is because the Cabinet has already approved the national budget, allowing the government to begin massive spending and implement a number of subsidy measures to boost domestic consumption, such as the digital wallet scheme and a reduction in transfer and mortgage fees for homes.
Meanwhile, a possible interest rate cut in the second half of this year would boost confidence by significantly lowering the cost of living and doing business, allowing entrepreneurs to consider investing or expanding.
He estimated that the consumer confidence index would recover in the next six months and reach 71.2.
Source: The Nation