Stimulus boosts confidence

Stimulus boosts confidence

Consumer confidence recovered last month after falling in September on the government's economic stimulus measures and lower oil prices.

The University of the Thai Chamber of Commerce yesterday reported October's consumer confidence index increased to 80.1 points from 79.2 in September, when it fell for the first time in five months.

Thanavath Phonvichai, vice-president for research, attributed the recovery to two factors — the government's 360-billion-baht economic stimulus package, which is expected to spur economic growth in the fourth quarter, and lower oil retail prices.

The cabinet last month approved a 364.5-billion-baht stimulus package including a cash injection of up to 15,000 baht each for more than 3 million rice farmers nationwide.

The package is aimed at boosting the economy over the next three months.

Under one scheme, 1.8 million households, each possessing a maximum 15 rai of farmland, received a one-time payment for cultivation costs at the rate of 1,000 baht a rai.

Another 1.6 million households, each owning more than 15 rai, received a flat 15,000 baht per household.

Other stimulus measures include expediting payment of 129 billion baht from the fiscal-2015 investment budget across all ministries.

Another 147 billion baht will be spent on projects under the fiscal-2014 budget that are slated to be implemented in the rest of this calendar year.

Some 23 billion baht from the remaining Thai Khem Khaeng project will be spent on repair work under the Education and Public Health ministries as well as on irrigation projects.

The government will also accelerate spending of 24.9 billion baht left over from budgets stretching back to fiscal 2005.

The survey showed consumer confidence in the overall economy rose to 69.6 points last month from  69.2 in September.

Confidence in job opportunities and future income also picked up, to 73.8 and 97 points from 72.9 and 95.5, respectively.

"The economic signs remain unclear, so it's difficult to forecast whether the economy improved or remained in a poor condition from the previous month," said Mr Thanavath.

"The confidence trend should be positive and continue improving, but that depends on government spending. People now feel the future economy will definitely get better but don't know when, as government spending has yet to be fully injected into the economic system."

He said tourism should revive at year-end.

Mr Thanavath said falling commodity prices and high living costs remained negative factors.

"It's essential that the government accelerate fiscal budget disbursement. The sooner, the better," he said.

The UTCC forecasts the economy to grow by 1.3% to 1.5% this year, but exports are likely to shrink by 0.5% or see flat growth. It projects the economy will grow 4-5% next year, with exports increasing 3-5%.

Mr Thanavath warned global economic conditions would need close monitoring and urged the government to take into account foreign sources to finance its planned 3-trillion-baht infrastructure development.

Relying on domestic funding could trigger liquidity constraints, possibly leading the private sector to secure loans at higher interest rates, which would eventually affect that sector's investment, he said.

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