Consumer confidence fell to the lowest level in 19 months in May as the public fretted over political instability, low farm product prices and deepening trade rows.
According to the latest survey by the University of the Thai Chamber of Commerce (UTCC), the consumer confidence index fell to 77.7 points last month, the lowest level since November 2017, from 79.2 in April and 80.6 in March.
"People are concerned about three key areas: the new government's stability, the impact of the mounting trade war and low crop product prices," said Thanavath Phonvichai, vice-president for research at the UTCC. "The new government must speed up measures to bring back their confidence."
He urged the new government to utilise state banks such as Government Savings Bank, GH Bank and the Small and Medium Enterprise Development Bank as tools to support economic growth.
"During the first six months, the new cabinet has to work hard to produce substantiated output in order to regain consumer confidence," Mr Thanavath said.
He warned that a sharp hike in the daily minimum wage could adversely affect the domestic economy and frighten away local manufacturers to relocate their factories in neighbouring countries.
"A gradual increase in line with workers' skills is acceptable," he said. "But it will shock the domestic economy and scare local manufacturers into relocating their factories if the wage jumps to 400-425 baht per day, or a 30% increase."
Mr Thanavath said the university is about to revise down its economic growth forecast from 3.5%, adding that further forecast revisions are likely if the US slaps tariffs of up to 25% on the additional list of Chinese imports worth US$300 billion (9.39 trillion baht) and China hits back with tariff hikes on US goods in retaliation.
On May 16, the UTCC cut its GDP growth forecast to 3.5% from February's 3.8% view.
The cut was attributed to six key risk factors: the intensifying trade war between the US and China; China's slowing economy; baht volatility; domestic political conflicts; relatively high non-performing loans at financial institutions and tighter lending approvals; and rising oil prices amid Middle East tensions.