Thailand: Consumers upbeat for 13th month

Consumer confidence rose for a 13th straight month in June and posted the highest level in 40 months since March 2020, driven by a resilient tourism sector and increasing agricultural product prices.

However, there is still concern about uncertainty in the political arena, said the University of the Thai Chamber of Commerce (UTCC).

The UTCC reported on Thursday the consumer confidence index rose to 56.7 in June, up from 55.1 in May, 55 in April, 53.8 in March, 52.6 in February and 51.7 in January.

Thanavath Phonvichai, president of the UTCC, attributed the increase to positive consumer sentiment about the economy improving amid a clear recovery in the tourism sector and rising economic activities in various regions.

Coupled with a decrease in oil prices, the cost of living has eased and consumer confidence has greatly improved, he said.

The index remains below 100 points as consumers are anxious about uncertainty surrounding the formation of the new government. High electricity prices remains a significant concern, said Mr Thanavath.

Other stumbling blocks include the stability of global financial institutions, the sluggish world economy, geopolitical conflicts, as well as interest rate adjustments to address inflation in various countries, according to the UTCC.

These factors may increase pressure on the global economic recovery, pushing it towards a recession, he said. Consequently, exports have contracted during this period, negatively affecting people’s purchasing power across all regions.

According to Mr Thanavath, key supporting factors for consumer confidence in the remaining months of this year include the increasing number of foreign arrivals, resulting in more money circulating within the country and improved economic activities in various regions.

In addition, the prices of agricultural products have increased, with many Thai staple crops posting positive adjustments or remaining stable at a good level, he said.

Retail gasoline prices also remained stable compared with the previous month, while the baht slightly depreciated.

Negative factors include the perception of a slow economic recovery and persistent high living costs, said Mr Thanavath.

He said the uncertainty surrounding the formation and stability of a government is also weighing on sentiment, while the dour export outlook, the global economic situation, issues with financial institutions in the US and the Russia-Ukraine war are dragging down confidence.

According to Mr Thanavath, the university sees drought as a key risk factor for the economy this year.

If a drought occurs, he said the estimated damage would be around 40 billion baht, trimming GDP by 0.2 percentage points, which he does not consider significant.