11-8-2023 (BANGKOK) Consumer confidence in Thailand experienced its first decline in 14 months in July, reflecting apprehensions surrounding the formation of a new government and political stability, which could have implications for the country’s economic revival.
According to a report by the University of the Thai Chamber of Commerce (UTCC) on Friday, the consumer confidence index dipped to 55.6, down from 56.7 in June.
Thanavath Phonvichai, President of the UTCC, highlighted, “The consumer confidence index remains below 100, indicating that consumers still perceive the economy as recovering slowly.” He further noted that the high cost of living and rising interest rates have had adverse psychological effects on domestic purchasing power, tourism, exports, businesses, and future employment prospects.
The prolonged inability of political parties to form a new government, even three months after the May 14 election, has instilled concerns about political instability among the populace. Consequently, people have become more cautious with their spending, reducing the circulation of money within the economy.
The tepid global trade environment and bleak export prospects, which may lead to a contraction of over 1%, have also impacted the supply chain, as per Thanavath Phonvichai.
Furthermore, the third quarter traditionally represents the low season for tourism, adding to the challenges faced by the economy.
Mr. Thanavath explained, “The caretaker government is prohibited from fully utilizing the state budget to drive the economy. Along with several other negative factors, money entering the economy is estimated to have declined by 50-80 billion baht. Consequently, the economic situation during June and July remained stagnant.”
However, he expressed optimism that if a new government can be formed by August or September and restore stability, consumer confidence should gradually recover.
In a related development, the TCC Confidence Index, which measures the sentiment of the business sector and members of the Thai Chamber of Commerce, inched up to 55.6 in July from 55.2 in June.
Mr. Thanavath acknowledged that the marginal increase in the business confidence index was due to uncertainties surrounding the new government. Nevertheless, he affirmed that the business sector continues to believe in the economy’s ability to sustain a steady recovery.
