Last month saw a rise in consumer confidence following the swift establishment of a new government, although concerns about the high cost of living and the sluggish global economy remain. The University of the Thai Chamber of Commerce (UTCC) revealed that the consumer confidence index rose to 56.9 from 55.6 in July.
This uplift was attributed to the easing of concerns over delays in the formation of a new government and political stability.
Thanavath Phonvichai, president of the UTCC, said that consumers are regaining confidence in the new government’s ability to boost economic recovery, particularly following Srettha Thavisin’s appointment as the 30th prime minister of Thailand.
“The overall political situation in Thailand appears to be stabilising as political divisions seem to be easing leading to increased consumer confidence across the board.”
Despite this positive trend, the overall consumer confidence index remains below 100, signalling that consumers still perceive the economic recovery as slow. The high cost of living and increasing interest rates are impacting domestic spending, tourism, exports, business activities and job prospects, reported Bangkok Post.
Consumers are particularly concerned about the high cost of living, notably electricity bills, and the uncertain global economic situation. The rise in interest rates in various countries to combat inflation could potentially hamper global economic recovery, leading to an economic downturn. This could affect exports and consumers’ purchasing power worldwide.
Thanavath, however, suggested that consumer confidence could continue to improve, especially if the new government swiftly implements policies and measures to stimulate the economy as promised during their election campaign.
He pointed out that the recently approved reductions in electricity and diesel prices are likely to ease the cost of living for the public and lower transportation costs for businesses. These measures could also help prevent a significant rise in inflation and reduce pressure on the Bank of Thailand to adjust its policy rate.
Thanavath anticipates that the central bank might raise benchmark rates by another 0.25% this year, just once, to ensure that the actual interest rates remain positive – a move that could also promote savings.
“This will also help reduce the cost of living for the public. Consequently, there won’t be significant pressure for an interest rate hike, as inflation is not expected to rise significantly.”
Thanavath concluded that such actions could further stimulate the economy in the fourth quarter, leading to an increase of an additional 1% from the normal level.
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