Confidence down for second month

Global concerns, farm prices weigh on mood

Consumer sentiment fell for the second straight month in November, as people remain concerned about the pace of domestic and global economic recovery and low commodity prices.

The University of the Thai Chamber of Commerce (UTCC) reported yesterday that the consumer confidence index dropped to 72.3 points last month from 73.1 points 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 — a 25-month low.

“Consumers still feel concerned about the pace of recovery for the domestic and global economies, while overall farm product prices remain relatively low,” said Thanavath Phonvichai, vice-president for research at UTCC. “We hope that the government’s holiday tax breaks will help boost consumer sentiment in the final month of the year.”

The much-awaited shopping tax break, a short-term measure to aid domestic consumption and ward off downside risks to growth, is likely to go before the cabinet next week.

The proposed measure will allow each individual taxpayer to write off domestic purchases of goods and services from Dec 15-31 from their personal income tax.

The Finance Ministry recently said that the cap on the tax deduction would most likely be doubled to 30,000 baht per taxpayer after last year’s 15,000-baht limit. The shopping period will also be lengthened to the end of December from last year’s seven days.

The 2015 tax break successfully added 0.2 percentage points to the country’s economic growth, bringing it to 2.8%.

Mr Thanavath said if the cabinet approves tax breaks for year-end shopping with a 15,000 baht cap, spending is estimated at 15-20 billion baht. That figure may reach 30 billion baht if the cap is raised to 30,000-baht.

Despite ongoing flooding in the South, overall spending, including that for tourism during the year-end holiday season, is estimated at 50-80 billion baht, helping boost GDP to grow 3% in the fourth quarter.

The National Economic and Social Development Board reported last month that GDP grew by 3.2% year-on-year in the July-September period as consumption and public spending slowed from 3.5% growth in the second quarter and against 3.2% growth in the first quarter.

Due to numerous risks, Mr Thanavath said the government is being urged to rev up spending on infrastructure projects.