Consumer and business sentiment plunged to record lows in May as both sectors fretted over the serious impact of the third wave, increased political instability and a delay in the government's vaccine distribution plan.
The University of the Thai Chamber of Commerce (UTCC) reported on Thursday the consumer confidence index fell to 44.7 in May from 46 in April, 48.5 in March, 49.4 in February and 47.8 in January.
"Consumer confidence fell to a record low since the survey began 22 years, eight months ago in October 1998," said UTCC president Thanavath Phonvichai. "People were concerned about the rapid and serious spread of the virus during April and May. The government's lockdown measures for some business sectors also resulted in less spending and a delay in the tourism recovery."
Mr Thanavath said consumers feel less confident about economic prospects, slowing down their spending.
He said factors undermining consumer confidence in the medium term include domestic political instability and debate on the possible dissolution of parliament, as well as political changes.
"Yet the most serious factor remains the pandemic and how it affects unemployment and consumer income," said Mr Thanavath. "Consumer confidence is expected to improve from this month after the mass vaccination plan began across the country this month. Although vaccine supplies may be insufficient at present, a large-scale vaccination plan and the arrival of alternative jabs in Thailand will boost consumer confidence."
He said the third wave of Covid-19 deeply affected the country's economic conditions, as consumer purchasing power weakened and household debt grew. The lack of liquidity in the business sector also caused a poor economic performance in the first quarter, said Mr Thanavath.
The UTCC projects combined losses from the second and third waves of the pandemic to reach up to 800 billion baht, assuming the outbreak can be contained either this month or next given wide-scale vaccinations.
In a related development, the UTCC announced on Thursday the TCC Confidence Index, which gauges the sentiment of chamber members in all provinces nationwide, dropped to 24.7 in May from 27.6 in April, 30.7 in March, 29.6 in February and 29.8 in January. Sentiment was at a record low since the survey started in June 2019.
The business sector remains concerned about the severity of the third wave, the country's current and future economic prospects, the efficacy of government measures to control the pandemic, state aid measures for affected business operators, as well as tight liquidity, he said.
"Tourism operators in provincial areas are in deep trouble. This directly affects employment in the sector," said Mr Thanavath.