June sees consumer sentiment recovery, albeit to still-low level
Consumer sentiment picked up for a second straight month in June, boosted by businesses reopening after the lockdown lapsed and the government's relief and economic stimulus schemes.
The University of the Thai Chamber of Commerce (UTCC) reported yesterday that the consumer confidence index rose 49.2 in June from 48.2 in May and 47.2 in April.
Despite improving sentiment, the index remains at historically low levels since October 1998.
Thanavath Phonvichai, president of the UTCC, said greater consumer confidence is stemming largely from the government's decision to ease the third and fourth stages of lockdown measures and a raft of financial relief programmes to cope with the fallout.
Mr Thanavath said consumers are still fretting over the economy and overall employment prospects, as well as lower domestic purchasing power, tourism and exports.
The World Bank last month warned that 8.3 million workers in Thailand could lose their jobs or income.
The number of economically insecure, or those living below US$5.50 a day, is projected to double from 4.7 million in the first quarter this year to an estimated 9.7 million in the April-to-June quarter before recovering slightly to 7.8 million in the third quarter, according to the World Bank.
With officials starting to loosen mobility restrictions, domestic consumption, Thailand's traditionally strongest growth driver, may pick up in the second half of 2020 and in 2021, but the recovery will be gradual and uncertain, the World Bank said.
The bank predicted that the Thai economy would shrink by at least 5% this year, the deepest decline in the East Asia and Pacific region, due to the country's reliance on trade and tourism.
Mr Thanavath said consumers are likely to slow their spending for the next 3-6 months.
He said consumers' growing concerns about domestic political instability are notable, especially with a possible cabinet reshuffle soon and escalating conflicts within the leading coalition party.
"Concerns about the second wave of the outbreak and no sign of a global economic recovery are also key factors that affect consumer confidence," Mr Thanavath said. "The university forecasts the economy to shrink by 8-10% this year, while the economic recovery is likely to start in the first half of 2021 once the pandemic situation is tackled."
He said the country's GDP is expected to hit its worst growth rate, somewhere in the range of -10% to -15%, in the second quarter because of the lockdown, adding that it would be the worst quarterly performance resulting from the crisis.
People slowed their spending on houses, motorcycles, cars and durable goods during the period.