Consumer confidence fell to the lowest point in 22 months in July, on concerns about the economic slowdown, political instability, the US-China trade war, and relatively low farm prices.
According to the latest survey by the University of the Thai Chamber of Commerce (UTCC), the consumer confidence index fell to 75 points last month from 76.4 in June, the lowest since October 2017. The index dropped for the fifth month, reflecting overall weak consumer confidence and purchasing power.
Thanavath Phonvichai, vice-president for research at the UTCC, said all the factors driving consumer confidence are negative.
“Negative factors are bountiful,” said Mr Thanavath. “At home, crop prices, be it rice, rubber or oil palm, remain low, while the number of tourists, especially for Chinese, is yet to recover.”
In July, the survey had yet to include the drought’s impact and US President Donald Trump’s announcement last Thursday he would impose a 10% tariff on US$300 billion of Chinese imports from Sept 1, and the latest bomb blasts in Bangkok.
“The government needs to introduce stimulus measures as soon as possible, while income guarantees as soon as possible and infrastructure investment should also be revved up,” he said.
“The economy is likely to grow by less than 3% this year, given increasing risk factors. The explosions that rattled Bangkok last week will also affect Thailand’s political stability and safety.”
Moreover, he said the government should deal with the baht’s strength because the upsurge is pressuring exporters, companies and farm products and they are losing their competitiveness.
Mr Thanavath said the central bank’s unexpected cut of its policy rate by 25 basis points on Wednesday does not affect the baht, saying it is no different than the US Fed’s rate cut.
To weaken the baht, he suggested the rate should have been cut by more than 25 basis points.