Consumer confidence rose to the highest level in 26 months in January, driven by the economic recovery, a surge in foreign tourist arrivals and the easing of the pandemic.
The University of the Thai Chamber of Commerce (UTCC) reported yesterday the consumer confidence index increased for the eighth straight month in January tallying 51.7, up from 49.7 in December, 47.9 in November, 46.1 in October, 44.6 in September, 43.7 in August, 42.4 in July, 41.6 in June and 40.2 in May.
The index was 40.7 in April, 42 in March, 43.3 in February and 44.8 in January.
The index is below 100 points because of weak purchasing power, the continued impact of Covid-19 outbreaks, high inflation and the Russia-Ukraine war, according to the university.
UTCC president Thanavath Phonvichai said consumers felt the overall economy has improved with the rapid recovery of tourism, especially Chinese visitors returning faster than expected, and the easing of domestic Covid-19 outbreaks.
The UTCC forecasts economic growth of 3.5-4% this year, driven by an anticipated surge in foreign arrivals, especially from China, along with a general election slated for the second quarter.
The university estimates 5 million Chinese tourists will arrive in the second quarter, tallying 7-8 million for the year, bringing the total number of foreign tourist arrivals to 26-27 million in 2023.
The UTCC expects the election to generate 50 billion baht in spending, raising economic growth by 0.3 percentage points.
According to Mr Thanavath, the rise in consumer sentiment was also attributed to the government's array of stimulus measures offered as "New Year gifts" to Thais, including the "Shop Dee Mee Khuen" tax rebate scheme, under which consumers can claim up to 40,000 baht in tax deductions for goods and services purchased between Jan 1 and Feb 15.
Other gifts include reductions in the land and building tax and property transaction fees, as well as a decrease in mortgage registration fees.
The prices of many cash crops rose, including rice, tapioca and maize, hiking farmers' income and consumer purchasing power.
However, he cautioned that a spate of negative factors could affect consumer confidence, such as a slower pace of economic recovery in Thailand, relatively low income as the cost of living continues to inch up, a hike in policy rates by the Bank of Thailand, and the recent growth forecast downgrade by the Fiscal Policy Office to 3% this year from 3.4% because of a weaker export outlook.
In addition, persistent concerns about the Russia-Ukraine war may affect global energy prices and production costs, while further Covid-19 outbreaks would weigh on consumer sentiment, said Mr Thanavath.
In a related development, the university released the TCC Confidence Index, which gauges the sentiment of the business sector and members of the Thai Chamber of Commerce in all provinces.
The index rose to 47.4 in January, up from 45.5 in December and 43.9 in November, driven mainly by a recovery in tourism and higher farm product prices.
However, the business sector is still concerned about tighter liquidity among small and medium-sized enterprises as well as higher production costs. The sector proposed the government tackle rising energy costs and power bills, while rolling out more measures to handle a possible recurrence of Covid-19 outbreaks after the country's reopening to foreign tourists.