Political turmoil dampens Thai consumer confidence in May

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Thailand’s Consumer Confidence Index in May dropped for the first time in the six months since Dec 2011 to 77.1 from the 77.6 recorded in April, according to a survey by the Economic and Business Forecasting Center at the University of the Thai Chamber of Commerce (UTCC).

Centre Director Thanawat Ponwichai released the survey Tuesday, saying that the overall consumer confidence index still remained below 100 due to concerns over political instability after the chaos which disrupted last week’s deliberation of reconciliation bills in the lower house of Parliament and protests outside the Parliament.

The index of the opinions of respondents regarding the political situation in May fell to 66.3, the lowest in the past 11 months, while the prospects for the index of the political situation in the next three months dropped to 76.6, the lowest in 12 months.

The survey showed that consumers were also worried about the debt crisis in the eurozone and the high cost of living, with the confidence index falling for the fifth consecutive month to 49.7, the lowest in 23 months.

The centre said the economy in the euro zone countries, particularly Greece and Spain, remains worrisome as the problem seems to be worsening and may affect Thai export’s sector, forcing a drop by 10-13 percent from earlier projected.

The drop in oil prices was caused by lower global demand, reflecting the global economic slowdown, while the U.S. also has been impacted by the eurozone economies, the director said.

However, depreciation of the Thai baht may help support Thai exports. It suggested that the government should focus on key Asian markets such as China and the ASEAN countries and commercial attachés should support the private sector to stimulate Thai exports. Meanwhile, Thai tourism, projected to generate an income of Bt650 billion, will help boost the economy.

The centre forecast public consumption will likely continue to be sluggish in the second quarter this year. The government should speed up implementing its fiscal and monetary policies through budget spending and offering loans to put more money into circulation, which will help prop up the economy, Dr Thanawat said.

If the political situation improves, the Thai economy is likely to recover in the middle of the third quarter this year and is projected to grow 5.5-6 percent, he said.