Consumer confidence plunges again

Consumer confidence plunges again

Spread of Omicron, higher costs of living and Ukraine all weigh on sentiment

Consumer sentiment dropped for the third straight month in March, hitting the lowest level in six months, as consumers remain concerned about the spread of the Omicron variant, higher costs of living and the impact of the Russia-Ukraine war.

The University of the Thai Chamber of Commerce (UTCC) reported yesterday the consumer confidence index fell to 42 in March from 43.3 in February and 44.8 in January. It stood at 46.2 in December, 44.9 in November, 43.9 in October and 41.4 in September.

An index lower than 100 points reflects weak purchasing power based on a slow economic recovery.

Thanavath Phonvichai, president of the UTCC, said consumers were less confident and more cautious about spending because of growing concerns about the Omicron variant outbreaks, rising costs of living and the ongoing war between Russia and Ukraine, which resulted in higher world oil prices, affecting production costs worldwide and the recovery pace of the global economy.

However, he said there are positive signs that may increase consumer confidence at the end of the second quarter, including the easing of testing rules for visitors to boost tourism, crop prices and export growth.

Deputy Health Minister Satit Pitutecha told reporters yesterday after a meeting of the Centre for Covid-19 Situation Administration that the government plans to scrap a mandatory RT-PCR test on arrival for foreign visitors from next month.

The RT-PCR tests will be replaced with antigen tests at the airports, he said, while vaccinated travellers will no longer need to reserve one night of hotel accommodation to secure visas.

"We still see the need for the government to roll out additional economic stimulus measures, particularly the extension of the 'Khon La Khrueng' co-payment subsidy scheme, which is scheduled to end this month," said Mr Thanavath. "If the scheme is extended until June, it will help drive the Thai economy through the end of the second quarter."

The UTCC forecast the country's GDP growth at 2.5-4% this year.

He said if the government can successfully contain Covid-19 infections and declare the virus endemic in June, one month before the state target, it will speed up the Thai economic recovery. This effort is estimated to increase GDP growth by 0.1-0.2 percentage points in the second half this year, said Mr Thanavath.

However, if the government fails to declare the virus endemic, it could reduce GDP growth by 0.5 percentage points this year, he said.

The TCC Confidence Index, which gauges the sentiment of members of the Thai Chamber of Commerce, fell to 35.5 in March from 36.1 in February.

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