Consumer confidence continued to decline in December, to the lowest level since May 2016, as the public fretted over the economic slowdown, mounting political instability and global uncertainty.
The University of the Thai Chamber of Commerce (UTCC) yesterday reported that the consumer confidence index fell to 68.3 in December from 69.1 in November and 70.7 in October.
Thanavath Phonvichai, president of the UTCC, said political instability, the economic slowdown, the continuing strength of the baht, fragile purchasing power and the weak global economy weighed on overall consumers and the private sector.
Relatively low agricultural prices for rice, rubber and tapioca also sapped confidence, with drought fears and the US-Iran conflict adding to concerns.
Drought is estimated to drag economic growth by 0.03%, worth 8-10 billion baht, mainly in the agricultural sector, especially for the second crops of which about 3 million rai of rice farmland or about 1.5 million tonnes of paddy is expected to be affected.
The government estimates paddy production for the second crop to fall by more than 50% in the 2019-20 season to 3.4-3.5 million tonnes, from 7.75 million tonnes the previous season, due to drought and inadequate water supply from dams.
Production from the main crop is forecast at 24 million tonnes of paddy, down 4-12.5% from 25-27 million tonnes the previous season.
Mr Thanavath said the industrial sector is likely to see an insignificant impact from drought conditions, now that several industrial estates (notably in the East) have prepared preventive measures.
According to Mr Thanavath, tensions in the Middle East remain despite moves towards a de-escalation.
"We still need to closely watch the situation, particularly for the impact on oil prices, which affect the cost of living for most people," he said. "Every one baht rise per litre in oil prices is estimated to add expenses of about 2,100 baht per month to consumers."
In a related development, the university is scheduled to unveil the new forecast for the country's economic growth on Monday after chambers of commerce nationwide reported that Thailand was seeing a number of risks, be it the strong baht, the global economic slowdown, the US-Iran conflict, domestic political instability or the widespread drought expected to last until May.
In December, the university forecast 2020 economic growth to average 3.1%, with a predicted range of 2.7-3.6%.