Consumer sentiment fell last month after an 18-month high in December, as people grew more concerned about the country's slow economic recovery, relatively low farm prices and weak export growth.
A man works to build a dyke along the Bang Kaeo canal in Ang Thong province. A recent survey shows consumer confidence dropped last month amid concern over weak recovery, sluggish exports and low farm prices. PATIPAT JANTHONG
The University of the Thai Chamber of Commerce (UTCC) yesterday reported January's consumer confidence index fell to 80.4 points from 81.1 in December, which was the highest since 81.6 in June 2013.
"Last month, consumer confidence turned abruptly pessimistic after positive sentiment during the New Year celebrations," said Thanavath Phonvichai, vice-president for research.
"People now feel the economy is recovering slowly and are not confident it really will make a comeback. Purchasing power upcountry was also found to have weakened due to tepid farm prices."
He said despite lower retail petrol prices helping to lower the cost of living, consumption is unlikely to recover very much as people remain uncertain about the pace of the economic recovery, Thailand's as well as the world's, while farm prices, particularly for rice and rubber, are likely to stay low.
"How fast consumption improves depends on government disbursement to boost the economy at a time when exports and tourism have yet to recover fully," Mr Thanavath said.
He said at a meeting of economic ministers on Wednesday, Prime Minister Prayut Chan-o-cha assigned the Commerce Ministry to address product prices, stimulate people's spending and tourism as well as boost exports.
This indicates the government has started acknowledging the economic recovery may be slower than expected, Mr Thanavath said.
The government must therefore work out measures to help ease the cost of living for low-income earners, inject new money to spur the economy and address unemployment during the dry season.
"Amid high household debt pressure, we expect people's consumption won't recover in the first quarter as expected earlier," Mr Thanavath said.
"Nonetheless, tourism over the Valentine's Day and Chinese New Year periods along with government megaproject investment of 100-150 billion baht this year will hopefully shore up economic growth."
Mr Thanavath said UTCC was maintaining its full-year forecast for economic growth at 3.5% to 4% and for export growth at 1-2%.
"As long as there are no more demonstrations and politics remains muted, we still believe GDP can manage 3.5% to 4% this year," he said.
The Bank of Thailand predicts 4% growth for 2015, up from its estimate of 0.8% for last year.
The International Monetary Fund recently estimated Thai GDP grew by 0.5% last year and would improve to 3.5% this year.
Its forecast is based on recovery to some extent in consumption along with private investment stemming from the government megaprojects.