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Thailand: Consumer confidence craters
Consumer confidence fell to its lowest level in 21 months in June as the public fretted over political instability, global economic uncertainty and low farm product prices.
According to the latest survey by the University of the Thai Chamber of Commerce (UTCC), the consumer confidence index fell to 76.4 points last month from 77.7 in May.
The index was down for a fourth straight month in June.
Thanavath Phonvichai, vice-president for research at the UTCC, said consumers were concerned about overall economic sentiment and the delayed formation of the new government.
“The UTCC’s political survey was at the lowest level in the five years since the National Council for Peace and Order took charge,” he said. “The US-China trade war continued to rise as a concern, while prices of Thai farm products were still low.”
Mr Thanavath said consumer fears mean cautious spending in the third quarter, so the coalition government should accelerate stimulus measures in order to restore confidence.
He said GDP can grow 3.5% in 2019 once the new government injects a stimulus budget of roughly 50-100 billion baht during August and September.
“Money circulation will boost GDP growth by another 0.5-0.7% in 2019,” Mr Thanavath said.
He said the government’s stimulus measures should start with the state welfare smartcards, Village Funds and infrastructure megaprojects.
Moreover, the government should deal with the baht’s strength because the upsurge is pressuring exporters, companies and farm products and they are losing their competitiveness.
“The central bank should oversee currency stability, and there are many supporting factors such as a reduction of the policy interest rate,” Mr Thanavath said. “The interest rate should be in line with the declining consumer price index, and the low interest rate will support the fiscal policy to stimulate the economy in the second half.”
Initially, the central bank can cut the interest rate by 25 basis points from 1.75% now and evaluate the economic situation, he said.
The new government should solve low farm prices and a price guarantee scheme should be used to help farmers, especially for rice, tapioca and corn, Mr Thanavath said.
“The confidence index trend will increase from the stimulus packages and economic confidence will be driven by the new administration,” he said.
The UTCC is maintaining its forecast for GDP growth of 2.5% in the first half, 2.8-3% in the second half and 3.5% for the full year.
Source: https://www.bangkokpost.com/business/1707166/consumer-confidence-craters