Confidence dips in October
Despite a spate of government stimulus measures, consumer confidence continued to ebb in October as the public fretted about the tepid economy, political instability, shrinking exports, low farm prices and global uncertainty stemming from trade wars and the Brexit impasse, as well as the US suspension of tariff preferences on 573 Thai goods.
According to the latest survey by the University of the Thai Chamber of Commerce (UTCC), the consumer confidence index fell to 70.7 points in October, down from 72.2 points in September.
The index was down for an eighth straight month and hit the lowest level in 65 months, since June 2014.
Thanavath Phonvichai, vice-president for research at the UTCC, said overall consumers saw the domestic economy as still fragile and the ongoing trade rift between the US and China as undermining global trade.
They were afraid that the Brexit stalemate and mounting international political conflicts would cause a negative impact on the global and national economies. Prices of many key farm products remained relatively low, while the domestic political situation becomes uncertain, Mr Thanavath said.
"Negative factors remain plentiful," he said. "The GDP downgrade by the Finance Ministry and the recent US suspension of trade preferences for Thailand under the Generalized System of Preferences [GSP] have added to the gloomy prospects for consumer confidence."
On Oct 25, the US announced the removal of US$1.3 billion (39.2 billion baht) in trade preferences for Thailand under the GSP, effective April 25, 2020.
Citing inadequate protection of internationally recognised labour rights, particularly in the seafood and shipping industries, the US Trade Representative said the US would suspend trade preferences for 573 categories of Thai exports, which could face import tariffs of up to 5% relative to their current duty-free status.
The Commerce Ministry estimates that the higher import tariff of 4.5% will reduce US-bound exports by $28.8-32.8 million next year, or 0.01% of overall exports.
But Mr Thanavath said there remain positive factors that could boost consumer confidence in the remaining months of the year, including the cash giveaway and cash rebate programmes, tourism and property stimulus incentives, state measures to help guarantee key farm prices, and the Bank of Thailand's latest policy rate cut.
"We still hope the prolonged trade dispute between the two giant economies could be settled by talks and the government's myriad economic stimulus measures will help boost consumer confidence in the last two months," he said.