Consumers still wary of spending

Consumers still wary of spending

UTCC index falls for fifth straight month

Thai consumer confidence hit a nine-month low in August as people became increasingly worried about the economic slowdown and political uncertainties.

Meanwhile, the Bank of Thailand's Monetary Policy Committee (MPC) will review its gross domestic product (GDP) forecasts for 2013 and 2014 at next month's meeting.

A survey by the University of the Thai Chamber of Commerce (UTCC) reported that the consumer confidence index dipped for the fifth consecutive month in August to 79.3 points. It was 80.3 points in July, 81.6 in June, 82.5 in May, 83.7 in April, 84.8 in March and 84 in February.

Consumers became less confident after the government's economic planning agency last month cut its 2013 GDP growth projection to a range of 3.8% to 4.3% from its previous forecast of 4.2% to 5.2%, the survey showed.

The slow global economic recovery also contributed to the fall in the index.

The August survey, which polled 2,246 Thais, also found that confidence has been shaken by a delay in government-led infrastructure projects, political uncertainties and falling agricultural product prices, particularly rubber and palm oil, which recently led to street protests around the country.

The overall economic index came in at 69.5 points in August, down from 70.6 in July, while the index for job opportunities registered 71.6, down from 72.4.

The index on future income declined to 96.7 from 97.9 points.

A score of less than 100 points indicates pessimism among consumers, while a reading above 100 means they expect conditions will improve.

Thanavath Phonvichai, UTCC's vice-president for research, said the higher cost of living and economic slowdown have prompted some consumers, particularly low-income earners, to rely more on unofficial loans or loan sharks.

Those who have enough disposable income are also opting to cut their spending.

"People are now cautious about their spending as they are worried about the economic outlook and political climate," said Mr Thanavath, adding that the university also plans soon to cut its economic growth forecast to a range of 3.5% to 4% from a range of 4% to 4.5%.

Benjarong Suwankiri, a first vice-president of TMB Analytics, said falling consumer confidence comes as no surprise because it is in line with the country's economic slowdown and weakened consumption, which has resulted in lower spending on vehicles and durable goods such as furniture and electrical appliances.

"Throughout this year, we expect consumer confidence to become more lethargic as we have yet to see any positive factors that will help boost confidence," he said.

"The recent rise in prices of cooking gas, electricity and expressway tolls during an economic slowdown has also aggravated people's consumption."

In a separate development, UTCC estimates that ongoing road blockages in the southern provinces of Nakhon Si Thammarat, Trang and Surat Thani by rubber farmers will cause economic losses of about 10 billion baht or about 0.1% of GDP if the protests last for a month.

Farmers are trying to pressure the government to boost rubber prices.

The economic impact mostly comes from difficulties faced by tourism operators and firms transporting goods and raw materials.

"Several parties are concerned about an expansion of the protests from rubber farmers to political rallies," Mr Thanavath said. "It's a must therefore for the government to step up talks with farmers to end the protest as soon as possible."

Pongpen Ruengvirayudh, the central bank's deputy governor overseeing monetary stability and a member of the MPC, said the committee will also revise its 2013 export growth projection from 4% when it meets on Oct 16.

The MPC's minutes for its Aug 21 meeting said the committee projected that economic growth in 2013 and 2014 will be lower than estimated due to risks of delays to the government's stimulus and longer-than-expected tepid domestic consumption.

In July, the Bank of Thailand slashed this year's economic growth forecast to 4.2% from 5.1% due to waning domestic consumption and the fragile state of the global economic recovery while maintaining its 2014 GDP growth estimate at 5%.

It also sharply trimmed its export growth forecast to 4% from the 7.5% projected in April on the back of slower demand from China and other Asian economies.

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