Thailand: TRA predicts flat spending in first half

The Thai Retailers Association (TRA) predicts flat consumer spending in the first half, despite bullish consumer sentiment¬ from the planned general election and the value-added tax refund for Chinese New Year shopping.¬
Worawoot Ounjai, TRA’s president, said the retail industry recorded slower growth during the first two months this year.¬
Mr Worawoot said retail recovered in 2018, but slowed in the third and fourth quarters.¬
In 2018 retail grew 3.1%, below GDP growth of 4-4.1%.¬
The retail and wholesale sector makes up 16.1% of manufacturing GDP, second behind industry. The sector employees 16% of the country’s labour force.¬
“Overall consumer spending in the first half is unlikely to recover as hoped,” he said, citing the government’s shopping tax incentives from Feb 1-15 as unlikely to entice many participants.¬
The latest data shows registration for the scheme at 10,000, with spending of about 10 billion baht, far lower than initial estimates of 6 million participants spending a total¬ of 100 billion baht.¬
Recently, the University of the Thai Chamber of Commerce (UTCC) projected the general election and the shopping tax breaks are expected to greatly benefit not only¬ large and medium-scale retail operators in Bangkok and the provinces, but also the overall economy in the first quarter.¬
The UTCC estimates 30-50 billion baht would be circulated during the campaign, boosting economic growth by 0.2-0.3%, while the government’s shopping tax¬ incentives from Feb 1-15 are expected to increase consumer spending by around 10 billion baht, raising GDP growth by 0.05-0.1%.¬
Mr Worawoot said retailers are more upbeat about growth prospects of the retail industry in the second half.¬
If the government succeeds in accelerating completion of the bidding for the planned infrastructure projects within the first quarter, the investments are likely to drive¬ growth of the retail sector at the end of the third quarter and the beginning of the fourth quarter, he said.¬
If not, the second half will be lethargic to failing for some business segments, said Mr Worawoot.¬
“The overall outlook for retail spending this year is not looking great. The middle to low-income consumer groups lack enthusiasm, while the middle to high groups are flat,” he said.¬
“This puts the retail sector at risk from uncertainty. The prospect of post-election instability also adds to retail uncertainty.”¬
The association recommends the government cut taxes on luxury goods while using promotions to attract more tourists.¬
An increase of wages for the elderly, introducing an hourly minimum wage and promoting border trade, would boost incomes and it is hoped consumer spending.¬
The group also suggests liberalising the duty-free shop sector by allowing other companies to operate duty-free stores at airports and retail spaces outside airports.¬
Facing a shortage of retail workers, the TRA wants the government to institute an hourly minimum wage to make it easier to hire part-time workers and the elderly.¬
Although the overall outlook for retail spending this year is not looking as good as expected, retailers still expect to aggressively expand their businesses this year, said Mr Worawoot.¬