Consumer confidence up after 4-month lull

The consumer confidence index (CCI) in August ticked up for the first time after four listless months on expectations of a stronger economic recovery driven by export and tourism growth and political stability, says the University of the Thai Chamber of Commerce (UTCC).

UTCC vice-president for research Thanavath Phonvichai said the CCI rose to 74.5 in August, up from 7.39 in July, recovering for the first time after facing four straight months of contractions.

The survey, which covered 2,246 respondents in August, showed some major positive factors that contributed to the CCI rise, such as substantial growth in exports, which rose 8.2% in the first seven months of the year.

The National Economic and Social Development Board reported last month that second-quarter GDP grew by 3.7% on an annual basis. The board also revised its 2017 GDP forecast upwards to 3.5-4.0% from 3.3-3.8%.

The CCI was conducted after the Supreme Court handed down a verdict on fake government-to-government rice deals that sent former politicians to jail and after former prime minister Yingluck Shinawatra reportedly fled the country.

The events signalled that the country may have ended its long political conflict with no violence, Mr Thanavath said.

“Strong export growth alongside improving farm prices such as rubber prices rising to around 60 baht per kilogramme, up from 55 baht previously, are good signs that will further support the CCI’s upward trend,” he said.

But there were also negatives that weighed on the CCI and kept it from rising sharply, like the recent floods that destroyed crops and disrupted economic activity.

Many consumers are still concerned about rising living costs spurred by higher oil and consumer goods prices, while escalating geographical tensions in the Korean Peninsula have led to jitters.

Mr Thanavath said the strong tourism industry ahead of the high season during the yearend period will lead to better employment and a spending boost, which could further support the CCI in the second half.

He said the UTCC’s survey in August was based on the old GDP forecast of 3.6%. The UTCC will conduct a new poll next month under the assumption of the revised GDP forecast of 3.8-4.0%.

Other factors, such as a new state policy to distribute low-income earner cards to the poor, will also be added to the next survey, Mr Thanavath said.