Consumer confidence rose for a third straight month in February, reaching its highest level in 14 months
Consumer confidence rose for a third straight month in February to the highest level in 14 months, driven by improving exports, higher crop prices and growing tourism.
The University of the Thai Chamber of Commerce (UTCC) reported yesterday that the consumer confidence index rose to 75.8 points last month from 74.5 points in January and 73.7 in December.
The figure was 72.3 in November and 73.1 in October. The index rose to 74.2 points in September, up from 73.2 in August, 72.5 in July and 71.6 in June, which was a 25-month low.
Thanavath Phonvichai, vice-president for research at UTCC, said confidence improved in almost all facets, including overall confidence in the economy, job opportunities, future income, and purchases of new cars and houses. Consumers gained confidence on improved exports, tourism and crop prices, particularly those of rubber, oil palm and sugar cane, he said.
But Mr Thanavath said consumers are likely to remain cautious about spending in the first half of the year, as they are concerned about global economic prospects that may be negatively affected by US trade policy and Brexit.
People are also worried about Thailand’s economic outlook, higher cost of living and consumer product prices, he said.
Mr Thanavath said people are still hopeful that government spending on infrastructure projects, the disbursement of an additional mid-year budget of 190 billion baht for fiscal 2017 to finance local development of 18 industry clusters in the provinces, higher private investment and lower unemployment will help offset concerns.
The UTCC forecasts Thai GDP growth of 3.5-4% this year, with export growth of 2-3% and an inflation rate of 1.5-2%.
Economic growth would average 3.3% in the first quarter and 3.2% in the second quarter, leading to first-half growth of 3.3%.
The university predicts third-quarter growth of 3.6-3.8% and growth of 4.0-4.2% in the fourth quarter, leading to second-half growth of 4%.
The baht is expected to average 35.50 to the US dollar this year.
In a related development, Mr Thanavath said he agreed with the government’s plan to extend the value-added tax (VAT) rate of 7% for another year until September 2018, adding that a delay in raising the rate is appropriate while the economy has yet to fully recover.
“Any VAT increase while the economy is recovering may have a negative impact on consumer confidence, because it could mean higher expenses,” he said. “The government should think carefully about the necessity of a tax increase and an appropriate period for such action.”