Consumer confidence takes a turn for the worse

Consumer confidence takes a turn for the worse

The prices for rice and other commodities are rising, a major reason for the first drop in consumer confidence in seven months. (File photo)
The prices for rice and other commodities are rising, a major reason for the first drop in consumer confidence in seven months. (File photo)

Consumer confidence dropped for the first time in seven months in February, as people were worried about low commodity prices, the baht's strength, the political situation and wage rises.

According to the latest survey by the University of the Thai Chamber of Commerce (UTCC), February's consumer confidence index stood at 79.3, down from 80 in January, which was a three-year high.

"In February, people were concerned about farm commodity prices, particularly for rice, rubber, tapioca and maize," said Thanavath Phonvichai, vice-president for research at the UTCC. "Some people also thought a minimum wage hike could slow economic growth. With higher costs, companies might seek to replace workers with technology, resulting in job losses."

Mr Thanavath said falling consumer confidence also shows Thailand's economic growth remains uneven, failing to help certain sectors. For instance, higher rice prices are benefiting only millers, not farmers, he said.

More importantly, people were worried about political stability after the military government postponed the sought-after general election to February next year.

"The fall is a bit surprising given the emergence of positive factors such as export growth and rising economic figures," said Mr Thanavath.

"Most consumers felt their income had yet to cover the higher costs of living, while government funds were not yet distributed to low-income people, with only some business segments benefiting."

The Commerce Ministry reported last month the country's customs-cleared exports rose 17.6% year-on-year in January to US$20.1 billion, the highest increase in 62 months.

The export surge was led by cars and parts, computers and parts, rubber products, plastic pellets, chemicals, finished oil, electrical circuits, machinery and parts, and steel and steel products.

Imports in January surged 24.3% from a year earlier to $20.2 billion (631 billion baht), resulting in a trade deficit of $119 million in January.

The Commerce Ministry said demand from key markets remained strong, while the baht's strength had scant impact on shipments.

Exports rose to all major markets, especially South Asia, where shipments surged 26.1% year-on-year last month.

Also seeing strong growth were exports to Japan (up 26.3%), the US (11.3%), the EU (8.9%), Asean (14.3%) and Cambodia, Laos, Myanmar and Vietnam (18.4%).

Shipments to Australia, the Middle East, Africa and the Commonwealth of Independent States also grew.

Exports of agricultural and agro-industrial products rose for the 15th straight month in January, up 16.2% year-on-year to $2.86 billion, led by rice, tapioca products, sugar, frozen poultry, and frozen and canned seafood.

The government's planning unit forecast Thailand's exports would grow 6.8% this year against 9.7% growth in 2017 and a marginal 0.1% increase in 2016.

This year's private consumption is forecast to grow on par with last year's rate of 3.2%, up from 3% in 2016.

The state planning agency predicts Thailand's economic growth in a range of 3.6-4.6% this year, compared with 3.9% in 2017 and 3.3% in 2016.

"Spending could improve in the second half, if there is a more broad-based economic recovery in the second quarter and consumers have more confidence in the political situation," said Mr Thanavath.

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