The consumer confidence index declined for a second consecutive month in April, attributed to a slow and uneven economic recovery and higher living costs, according to a survey by the University of the Thai Chamber of Commerce (UTCC).
Thanavath Phonvichai, president of the UTCC, said the index dropped to 62.1, from 63 in March.
Even though the 21-day Songkran festival in April was expected to stimulate tourism income, holiday spending was offset by rising living costs following the expiration of the government's diesel subsidy and political instability, as Foreign Minister Panpree Bahiddha-Nukara resigned from his post.
An index below 100 points signifies weak confidence, related to the slow economic recovery, higher living costs, elevated interest rates, and geopolitical conflicts affecting consumer purchasing power and their confidence in spending.
A separate survey of chamber members from across the country rose to 55.3 in April from 55.2 a month earlier, reflecting increasing confidence among business operators.
However, the private sector is still concerned about the rising cost of production, such as higher electricity and fuel prices, as well as the government's plan to increase the daily minimum wage to 400 baht nationwide.
Chamber members called for the government to stimulate tourism in different provinces and regions to increase income, said Mr Thanavath.
He said the private sector is not willing to pay a daily minimum wage of 400 baht as other production costs are too high.
Business operators may increase product prices by 10-15% to compensate for the wage hike, while companies asked to maintain product prices are likely to reduce the size of their products, said Mr Thanavath.
He said a survey of 403 business operators across the country from April 22-26, comprising manufacturing (36.9%), trade (33%), and the service sector (30.1%), found an appropriate daily minimum wage would be 370 baht.
A surge in the minimum daily wage from 360 to 400 baht will benefit 7 million workers, which is expected to create a fiscal multiplier of 3.6 billion baht, raising growth by 0.05%. However, the increase in product prices will cause GDP to grow less than expected, by 0.1-0.2%, due to reduced purchasing power.
"The economic growth forecast for Thailand in 2024 is 2.6%," Mr Thanavath said.
"The government should expedite disbursement of the 2024 state investment budget of 700 billion baht for better economic recovery in the third quarter of the year."