Consumer sentiment rose for the first time in three months in December, lifted by the holiday tax breaks, improving exports and higher rice prices.
The Bank of Thailand's recent decision to keep policy rate at 1.5% and hold its GDP growth forecasts for 2016 and this year at 3.2%, as well as a weak baht, also boosted consumer confidence.
The University of the Thai Chamber of Commerce (UTCC) reported yesterday that the consumer confidence index rose to 73.7 points after dropping to 72.3 in November and 73.1 in October.
The index rose to 74.2 points in September, up from 73.2 in August, 72.5 in July and 71.6 in June -- a 25-month low.
"A number of positive factors boosted consumer confidence in the final month of 2016," said Thanavath Phonvichai, vice-president for research at UTCC.
"Exports unexpectedly surged to hit a nine-month high in November, while the holiday shopping tax break, a short-term measure to aid domestic consumption and ward off downside risks to growth, helped stimulate consumer spending, and rice prices have improved thanks to the government's measures."
The Commerce Ministry reported on Dec 26 that exports bounced back strongly in November to US$18.9 billion after falling 4.2% year-on-year in October and against a growth of 3.4% and 6.5% in September and August, respectively.
Higher exports indicate a global economic recovery led by the US and Japan and rising oil prices.
In November, imports rose 3% higher from the same month in the previous year to $17.4 billion, producing a trade surplus of $1.54 billion.
For the first 11 months of 2016, exports totalled $197 billion, down marginally by 0.05% year-on-year, with imports shrinking 5.1% to $177 billion. The trade surplus for the period totalled $19.7 billion.
Mr Thanavath forecast consumer sentiment would rise further in the first quarter in accordance with economic growth estimated at 3.2-3.5%, improving exports on the recovering global economy, growing tourism and accelerated investment in infrastructure projects.
The UTCC projects the economy to grow 3.6% for the whole year in 2017.
However, Mr Thanavath said many downside risks remain, such as rising oil prices, relatively low farm product prices, lingering concerns about the cost of living and slower-than-expected global economic recovery.
He added that exports will also face external risks such as the impact of Britain's departure from the European Union and the trade policies of the US under its new president.
Referring to ongoing floods in southern provinces, Mr Thanavath said the floods are expected to cause losses of about 5 billion baht with key tourism spots unaffected and minor impact on the farm sector.
He believes the floods are unlikely to have much affect on consumer confidence and the overall economy, he said.