Consumer confidence rebounds

Consumer confidence rebounds

UTCC says economy has bottomed out

Consumer confidence has risen for the first time in 10 months, likely boosted by the government's economic stimulus measures.

A survey by the University of the Thai Chamber of Commerce (UTCC) released yesterday showed the consumer confidence index for October increased to 73.4 points.

It rose from 72.1 points in September, the lowest reading since May 2014, after which confidence began rising based on hopes of an economic rebound after the military coup ended months of unrest.

"We think the Thai economy has already bottomed out despite its fragile condition," said Thanavath Phonvichai, vice-president for research.

"If the government can inject money this month and next as it has planned, consumer confidence and the economy will improve further."

To spur the economy, the government approved 136 billion baht for three stimulus packages in early September to put money into the pockets of low-income earners who have been hit by soft agricultural prices amid the stuttering economy.

The government later approved a myriad of measures to help small and medium-sized enterprises as well as the property sector and homebuyers.

On Tuesday, the cabinet approved a budget of 12 billion baht to support rubber farmers suffering from tumbling prices.

Mr Thanavath said the government likely injected 10-20 billion baht last month from support measures, while higher tourist arrivals also increased revenue.

The UTCC forecast economic growth of 2.5% to 3% this year, rising to 3.5% to 4% next year, he said.

Exports are expected to recover from a 5% contraction this year to 2% growth next year thanks to the recovering global economy.

Mr Thanavath said the global economy would show clear signs of recovery in the second half after a sluggish first half.

The Asean Economic Community slated for year-end could also be a boon to foreign investment here as investors use Thailand as a gateway to Asean.

"But middle-income earners do not have more confidence in higher spending, particularly for durable goods such as cars and houses," he said.

Somkiat Anuras, vice-chairman of Thai Chamber of Commerce, said after a recent visit to Ubon Ratchathani and discussions with provincial chamber members, he believed the government's economic stimulus measures had reignited hope, particularly in rural areas.

The economy will definitely improve if the government succeeds in installing the measures as planned, he said.

"There is slow budget disbursement," Mr Somkiat said.

"The government must make the approval process more convenient and less complicated for stimulus measures."

Charl Kengchon, managing director of Kasikorn Research Center (KResearch), said the government's stimulus measures had a major effect on shoring up consumer sentiment.

The stimulus measures are expected to contribute 0.1% to GDP growth, but it is likely their effects will materialise next year since it is already November, he said.

"Effects from these measures will contribute to greater flows of financial liquidity, which are expected to occur near the end of the final quarter and into next year's first quarter," Mr Charl said.

Bank of Thailand analysis projects the stimulus measures to aid low-income earners will add only 0.1% to the GDP during their effective period.

Thailand's economic doldrums have already bottomed out, as households are more optimistic, according to KResearch's household economic index.

The central bank's economic indicators in September also suggested private consumption and private investment turned positive on a month-on-month seasonally adjusted basis, Mr Charl said.

But he said the ongoing drought and China's economic slowdown were the main factors determining whether the rise in consumer confidence could be sustained.

"It is questionable whether Thai exports in 2016 will grow, as China's slowdown remains a concern," Mr Charl added.

Housekeeper Sunanta Kehachote, 56, said despite the stimulus measures, nothing felt different. She called on the government to control the cost of living and food and consumer product prices.

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