Consumer sentiment dropped for the first time in three months in December as people grew concerned about a surge in Covid-19 infections in the country.
The University of the Thai Chamber of Commerce (UTCC) reported yesterday the consumer confidence index fell to 50.1 in December from 52.4 in November, following readings of 50.9 for October, 50.2 for September, 51 for August, 50.1 for July, 49.2 for June, 48.2 for May and 47.2 for April.
Thanavath Phonvichai, president of the UTCC, said people are nervous about a fresh round of coronavirus infections, which is affecting people's lives, businesses and economic prospects, especially in tourism and services.
The latest downgrade in the country's economic growth forecast by the Monetary Policy Committee (MPC) would also affect consumer sentiment, said Mr Thanavath.
The MPC's latest edited minutes on Wednesday warned the country's GDP growth this year could drop below 3.2% from the previous forecast of 3.6%.
Uncertainties surrounding the Covid-19 situation in the near term as well as uncertainties regarding vaccine efficacy and vaccination coverage in Thailand could affect progress in the admission of foreign tourists and tourism recovery to the country, according to the minutes.
The projection for foreign tourist arrivals was downgraded following the latest outbreak. The central bank forecasts inbound arrivals of foreign tourist arrivals in 2021 to tally at 5.5 million, a decline from an earlier projection of 9 million.
Thailand registered 6.7 million foreign tourist arrivals in the first 11 months of 2020, down 81.4% year-on-year.
The Tourism and Sports Ministry reported tourism receipts in the first nine months were worth 655 billion baht, down 70.6% from the same period last year, representing a decrease of 1.57 trillion baht.
Public expenditure, one of the main drivers sustaining Thailand's economy last year, is anticipated to be reduced as the fiscal 2021 budget was lower than expected, as was the carryover budget, while some state-owned enterprise investment was cut or postponed, according to the minutes.
According to Mr Thanavath, the new outbreak is likely to derail the country's economic recovery, while persistent baht strength affects the country's export competitiveness.
"Overall, consumers remain concerned about the country's economic slowdown, higher cost of living and product prices, while their current income doesn't align with the rising cost of living," he said.
Consumers are expected to reduce their spending until the pandemic eases and the government succeeds in containing the new spread of the coronavirus, said Mr Thanavath.
Mr Thanavath said the fresh coronavirus outbreak may whittle down the country's economic growth this year to 2.2% from 2.8% earlier projected.
Mr Thanavath said the government would need at least 200 billion baht to shore up the economy in the first quarter.
Another factor for consumer confidence in the first quarter is domestic political strife, according to Mr Thanavath.