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Thailand: Consumer confidence skid continues
Consumer confidence plunged to a 39-month low in September as the public fretted about the tepid economy, shrinking exports, low farm prices and global uncertainty stemming from trade wars and the Brexit impasse.
According to the latest survey by the University of the Thai Chamber of Commerce (UTCC), the consumer confidence index fell to 72.2 points in September, its lowest level since July 2016, after readings of 73.6 in August and 75 in July.
The index was down for a seventh straight month despite the government’s economic stimulus measures.
Thanavath Phonvichai, vice-president for research at the UTCC, said factors weighing on consumer sentiment included a downgraded growth view from the central bank’s rate-setters, an export decline in August, lingering concerns over the US-China trade war and flooding that could hurt farm production and tourism.
Mr Thanavath said most consumers were concerned about higher prices for fuel and consumer goods and the rising cost of living.
At its Sept 25 meeting, the central bank’s Monetary Policy Committee (MPC) unanimously kept the policy rate unchanged at 1.50% after a surprise 25-basis-point cut in August, the first reduction since April 2015.
The MPC lowered its 2019 GDP growth forecast in a third downgrade this year, from 4.2% predicted late last year to 3.8%, then 3.3% and now 2.8%.
Thailand’s economy is losing momentum, with economic growth of 2.8% in the first quarter and 2.3% for the three months through June. Last year’s growth was 4.1%.
Risks to the economic projection are skewed to the downside, with trading partners’ economic growth slipping because of a number of uncertainties, including trade spats, a longer downturn in the electronics market cycle, Brexit negotiations and geopolitical risks, the MPC said, according to the minutes of the September meeting.
All of the above factors have had the cumulative effect of lowering Thai merchandise exports, the panel said.
Domestic demand could be lower than expected because of uncertainties regarding government policy implementation, delays in public-private partnerships for infrastructure investment projects and a further weakening of household purchasing power as a result of deteriorating employment in export-related sectors and the fallout from natural disasters, the MPC said.
While some financial system risks that could pose vulnerabilities to future financial stability have been partially addressed by macroprudential measures, other risks to financial stability have not improved and warrant monitoring.
These risks include swelling family debt; search-for-yield behaviour in the prolonged low-interest-rate environment, which could lead to underpricing of risks, especially for savings cooperatives and leverage for large corporations; and greater risk in the real estate sector, especially with the oversupply situation in some areas.
Thailand has one of the highest levels of household debt in Asia, at 78.7% of total GDP at the end of March, which was also the highest since the first quarter of 2017.
The UTCC predicts Thai economic growth of 2.6-2.8% this year, Mr Thanavath said, adding that the latest stimulus measures are likely to only slightly boost consumer confidence because of slow disbursement.
Source: https://www.bangkokpost.com/business/1769444/consumer-confidence-skid-continues