September consumers less confident
Consumer sentiment fell for the first time in five months in September, as people remained concerned about political instability, the slow economic recovery and higher unemployment as a result of the pandemic.
The University of the Thai Chamber of Commerce (UTCC) reported yesterday that the consumer confidence index dropped to 50.2 in September from 51 in August, following readings of 50.1 in July, 49.2 in June, 48.2 in May and 47.2 in April.
"Overall consumers are increasingly worried about political stability after several political protests were held in September and the finance minister abruptly resigned," said Thanavath Phonvichai, the UTCC president. "People also fretted over the slow recovery of the economy and job-loss prospects. The prolonged outbreak also results in a negative impact on domestic purchasing power, tourism, exports and general businesses."
He said consumers are expected to slow their spending until the fourth quarter of this year or until the end of the crisis.
"We are monitoring two factors: the outcome of the government's economic stimulus measures and the political situation," Mr Thanavath said. "Both factors carry weight in consumer confidence."
He said that if political gatherings escalate, job losses mount, the recovery remains slow, more debts turn sour and businesses see a further tightening of liquidity, consumer confidence is expected to drop further.
Mr Thanavath said consumers are also concerned about the slow tourism recovery.
"If the government's tourism stimulus measures fail to yield fruit in October, there may be more than 500,000 job cuts in the sector in the fourth quarter," he said. "The government is desperate to assist entrepreneurs in shoring up their operations to maintain employment and reduce the impact on the overall economy."
Mr Thanavath said several measures are expected to help boost consumer spending in the fourth quarter, including the co-payment scheme in which a maximum of 3,000 baht is handed out per person to 10 million consumers over a three-month period from a budget of 45 billion baht.
Other measures are the 500-baht monthly financial assistance given to 14 million low-income earners who have state welfare cards for three months totalling 21 billion baht, as well as the 30,000-baht tax break for taxpayers purchasing products and services.
"All measures where the government has injected a combined 110 billion baht are likely to boost the domestic economy's growth by 2-3 percentage points in the fourth quarter, making figures in the fourth quarter contract less than the earlier forecast 6-7%, or about a 4-5% contraction," Mr Thanavath said. "If the government continues introducing more stimulus measures and preventing a second wave of outbreaks, we believe the economy can manage growth of 3-4% next year."