Confidence falls to April 1999 levels

Consumer confidence plunged to an almost 21-year low in February as people remain gravely concerned about the coronavirus contagion, compounded by widespread drought, the delayed fiscal 2020 budget, the domestic economic slowdown and the PM2.5 pollution plague.

Yesterday the University of the Thai Chamber of Commerce (UTCC) reported the consumer confidence index dropped to 64.8 in February from 67.3 in January.

This was the 12th straight month of declines and the lowest level since April 1999.

“Overall consumers still have negative attitudes about the country’s economic prospects, their future income and employment, leading them to stay cautious in spending,” said Thanavath Phonvichai, president of UTCC.

“Consumers and the business sector both foresee the economy possibly recovering early next year.”

Gloomy prospects prompted the UTCC to lower the economic growth forecast for a second time to 1.1% from 2.8% made in January.

In December, the university forecast 2020 economic growth would average 3.1% or a range of 2.7-3.6%.

“Economic losses from the impact of the pandemic, drought, the delayed fiscal 2020 budget and haze are enormous, with combined damages estimated to be worth 841 billion baht, while more than 2.3 million workers face layoffs. Lower overtime pay and reduced working hours as well as temporary leave are expected,” said Mr Thanavath.

The pandemic alone is estimated to cause damages worth 749 billion baht, with 402 billion in tourism revenue, 117 billion from lower private consumption, 93.9 billion from decreasing private investment and 136 billion from lower exports.

He said the 1.1% growth forecast assumes the contagion will improve by May, with foreign tourists returning and the US-China trade row easing without a hike in import tariffs.

The foreign exchange rate is projected at 30.50-31.50 baht per US dollar.

“For workers expected to be affected by the outbreak and other factors, we do not project a mass layoff,” said Mr Thanavath.

“The estimate also takes into account those likely to face lower overtime payments.”

He said the university expects the outbreak to affect 1.67 million workers, with 629,064 in the restaurant and hotel sector, 283,472 from wholesale and retail, 180,391 from the service sector, 42,515 from transport and communication and 25,671 in food production.

For workers expected to be affected by the outbreak and other factors, we do not project a mass layoff. THANAVATH PHONVICHAI President, UTCC