Thailand: Consumer confidence rises again as recovery continues

Consumer and business sentiment in December rose to the highest level in three years, driven by Thailand’s economic recovery and a surge in foreign tourist arrivals.

The University of the Thai Chamber of Commerce (UTCC) reported yesterday the consumer confidence index increased for the seventh straight month in December, hitting a 25-month high, tallying 49.7, up from 47.9 in November, 46.1 in October, 44.6 in September, 43.7 in August, 42.4 in July and 41.6 in June.

The index was 40.2 in May, 40.7 in April, 42 in March, 43.3 in February and 44.8 in January.

An index below 100 points reflects weak purchasing power, the continued impact of Covid-19 outbreaks, high inflation, and the ongoing Russia-Ukraine war, according to the university.

Thanavath Phonvichai, president of the UTCC, said consumers felt more confident after the tourism sector witnessed a clear and rapid recovery, which has boosted employment and the domestic economy.

Consumers are ready to buy more durable goods such as houses and vehicles, he said.

“An increase in foreign tourist arrivals has resulted in more money circulating in the economy and increased transactions in regional areas,” said Mr Thanavath.

“We expect higher spending by consumers from the second half of this year.”

The Thai economy is expected to grow by 3.6% this year, with expansion of 3.4-3.5% in the first half and 3.7-3.8% in the second half, according to the UTCC.

Mr Thanavath said the Thai economy could grow by nearly 4% this year thanks to the anticipated surge in foreign tourist arrivals, especially from China.

Chinese tourist arrivals are estimated at 5 million in the second quarter, and could reach 7-8 million for the whole year, which could raise the total number of foreign arrivals to 26-27 million this year, according to the UTCC.

“Many economic analysts still expect the world’s economy to move in positive territory, albeit at a lower growth rate compared with last year, while global energy prices are estimated at US$80 per barrel in the first half of this year as the Russia-Ukraine war is unlikely to become more intense,” said Mr Thanavath.

He said the Thai general election, which is expected to be held in the second quarter, should also boost economic activity.

The university expects the election to generate 40-50 billion baht worth of spending, raising domestic economic growth by 0.3 percentage points.

In a related development, the UTCC released the TCC Confidence Index, which gauges the sentiment of the business sector and members of the Thai Chamber of Commerce in all provinces. The index rose to 45.5 in December from 43.9 in November, driven by a recovery in tourism.

However, the business sector is still concerned about the high cost of living, as rising power bills are likely to impact consumer spending. The sector proposed the government help with consumer living costs and rising production costs caused by higher energy prices, as well as work to limit appreciation of the baht.