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Consumer Confidence Continues to Decline, UTCC March Survey Finds

By on Apr 03, 2015 in Property News

The University of the Thai Chamber of Commerce now projects the economy to expand by only 3-3.5 per cent this year instead of 3.5-4 per cent because of mounting concern over the global economic uncertainty, lack of timely and concrete actions to help stimulate the domestic economy, and crumbling consumer confidence, which means lower spending.

pic1A UTCC survey in March found consumer confidence declining for the third month in a row to a nine-month low amid the plunge in crop prices, lower export and economic growth, and bad news about hikes in household and land-ownership taxes.

“Many negative factors hit consumer confidence in economic expansion, both internal and external.

“It seems the tourism industry is a major economic engine, which after the cancellation of martial law should help increase foreign confidence, while other industries are still fragile along with the uncertain global economy,” Thanavath Phonvichai, director of the university’s Economic and Business Forecasting Centre, said yesterday.

The UTCC forecasts the economy in the first quarter growing by 2.5 per cent, in the second quarter by 2.5-3 per cent and in the second half by 3.5-4 per cent. Export growth could also slow from 1.5 per cent to only 0-1 per cent this year.

The Consumer Confidence Index declined to 77.7 points in March from 79.1 points in February. Any score below 100 indicates low confidence.

Last month, other indices reflecting consumer confidence also continued dropping, including future incomes to 94 points and employment opportunities to 72 points.

Delays in state spending will continue to be a drag on consumer confidence, as no government money is being injected into the economy and the public sector.

The private sector has urged the government to speed up spending on many projects, weaken the baht to facilitate exports, and maybe cut the policy interest rate in the third quarter if there is still no positive sign of economic recovery in the second.

The slippage in consumer confidence was attributed to the Bank of Thailand’s decision to cut its forecast for this year’s economic growth from 4 per cent to 3.8 per cent.

The export sector in February also contracted 6.15 per cent from the same month last year. Crop prices remained low. Consumers also expressed concern about global economic conditions and the high cost of living. The positive factors cited in this survey were the easing of fuel prices and the decision by the BOT’s Monetary Policy Committee to cut the policy rate by 25 basis points to 1.75 per cent.

Confidence in the domestic political situation also fell to the lowest level since September at 94 points, as consumers have not acknowledged many positive signs of sustained political stability.

Based on the nationwide survey with 2,232 respondents, people also had reservations about spending their money on a new car, house or travel, or to start a new investment.

Source: The Nation, 3 April 2015

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