Thai consumer confidence hits highest level since March 2020

Consumer confidence in Thailand reached its highest level since March 2020, with a 12th consecutive monthly increase in May. The University of the Thai Chamber of Commerce (UTCC) reported that the consumer confidence index rose to 55.07 in May, up from 55 in April. Factors contributing to this increase include a recovering economy, a resilient tourism sector, and political campaigns during the General Election.

The index remains below 100 points as consumers perceive the economy to be recovering slowly from the pandemic. High inflation, rising interest rates, and concerns about the instability of US financial institutions have impacted domestic purchasing power, tourism, exports, business activities, and future job opportunities, according to the index.

Political uncertainty in Thailand, particularly regarding the formation of a stable government and the selection of a new prime minister, has also affected consumer confidence. Thanavath Phonvichai, president of the UTCC, said that consumer confidence is gradually improving, but remains weak due to political instability and a high cost of living, leading to cautious spending. He said…

“Politics has a considerable influence on confidence and we may have to wait 3-4 months to assess whether it has revived.”

If a government can be formed by August, the economy would benefit, and GDP growth would reach 3.6-4%. However, if a government cannot be formed until September or October, growth may be only 3%. The university is maintaining its growth forecast for this year at 3.6% but may adjust the figure in July.

Thanavath said the Thai economy should strengthen in the second half of this year as the tourism and service sectors recover. The economic growth trend in Asia will contribute to global economic growth, creating positive effects on Thai exports.

Consumers have concerns about political pledges to increase the daily minimum wage, as well as higher production costs and rising interest rates, according to the index. Thanavath said…

“Regarding foreign investors, there is no sign of a lack of confidence or withdrawal of investments. This is a wait-and-see period as the government forms. When the new government’s policies are announced, foreign investors can make more decisive decisions.”

The UTCC also released the TCC Confidence Index, which gauges the sentiment of the business sector and chamber members in every province. The index rose to 53.6 in May from 51.9 in April, driven mainly by a recovery in tourism.

“In the first half of this year, an estimated 12 million foreigners will arrive in Thailand, with 25-28 million forecast for the entire year.”

However, Thanavath said most business operators remain concerned about household debt as well as the high prices of goods and energy, which may prevent a full recovery of consumer spending. Moreover, enterprises are wary about political stability as the formation of a new government is still pending, reported Bangkok Post.