Confidence hits 64-month high in July

THE NATION

August 12, 2011

 

The Thai Consumer Confidence Index (CCI) jumped to 84.7 points in July, its highest level in 64 months, thanks to strong confidence in the new government to spur economic growth, according to a survey by the University of the Thai Chamber of Commerce (UTCC).

The survey further indicated that consumers had more confidence to spend money, in particular on new cars, homes, travel, and investment in the future, as indices related to confidence on spending for those products also peaked.

Of note, the UTCC poll released yesterday showed higher consumer confidence for a third consecutive month, rising from 81.7 points in June to 84.7 in July.

Other positive factors that contributed to this rising confidence included lower fuel prices, increased export growth, stable agricultural-commodity prices, confidence in the country’s economic growth – up 4.1 per cent this year – and higher interest rates.

Thanavath Phonvichai, director of the UTCC’s Economic and Forecasting Centre, said consumer confidence was expected to grow continuously in step with the public’s positive outlook for the new government. As a result, domestic consumption and investment in the fourth quarter is also expected to increase.

There are, however, two major factors that could affect confidence: possible global economic stagnation and a higher cost of living. This puts pressure on the new government to monitor the situation closely and work to find solutions to the challenges of higher living costs.

He further said the August index would reflect whether confidence would grow throughout the year regarding the new Cabinet and global situation among the major economic powers.

Thanavath pointed out that economic stagnation in much of the world would be a major negative factor that the new government should closely monitor and be prepared for any impact from a slowing of growth among Thailand’s trading partners.

Thai exports and tourism would be the first to be hit from an economic slowdown in the European Union and the United States. The EU and the US accounted for 20 per cent of Thailand’s exports last year. Also, more than 25 per cent of tourism revenue to the Kingdom is from tourists arriving from these markets.

He also said Asia’s slowing growth rate and the impact from higher inflation in China could affect Thailand’s economy.

Wachira Kuntaweethep, a lecturer at the UTCC, pointed out that the CCI on car purchasing surged beyond 100 to 109.8 points last month, reflecting a greater inclination to spend money.

Other indices related to consumer confidence also grew last month.

Based on a survey of 2,247 people, confidence in future income grew beyond 100 points to 102.8 points in July, the highest in six years. Also, the index on future employment opportunities rose from 72.9 to 74.9 points last month.

An index below 100 indicates diminished consumer confidence. In Thailand, CCIs have remained below 100 since 2005.

“Last month, the index on the cost-of-living outlook also increased from 54.4 points in June to 58.6 points as consumers displayed a positive outlook on future income. However, the rate is still very low, reflecting rising concern over the higher cost of living,” Wachira said.

Of note, the index on corruption dropped from 69 to 67.4 points last month