Consumer confidence at 44-month high

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Consumer confidence at 44-month high 
Bangkok Post: 10 Sep 2010
Consumer confidence at 44-month high


Consumer confidence jumped to a 44- month high in August, as the Thai economy showed clearer signs of recovery and exports continued to rise.

But political uncertainty, highlighted by more discoveries of bombs in Bangkok and elsewhere, and further appreciation of the baht remain risks to the economy, according to the University of the Thai Chamber of Commerce (UTCC).

The index measuring sentiment based on a survey of 2,239 respondents rose for a fourth straight month to 79.3 last month from 79.1 in July.

The overall economic outlook index also increased to 72.8 from 71.4, with the job opportunity index rising to 71.6 from 70.1 and expectations of future income improving to 98.1 from 96.4.

Nonetheless, the consumer confidence index remains below the normal level of 100, with lower results indicating weaker sentiment.

"People are feeling confident that the situation, particularly political differences, would improve steadily," said Thanavath Phonvichai, an economist at the university.

"We expect local consumption to recover strongly in the fourth quarter and help support growth."

According to Mr Thanavath, a key driver of improving confidence stemmed particularly from the latest economic forecast by the National Economic and Social Development Board (NESDB), which has revised up its economic growth forecast to a range of 7% to 7.5% this year from a range of 3.5% to 4.5% earlier.

GDP expanded 9.1% in the second quarter, as rising exports countered the impact of the political clashes that killed at least 89 people in April and May. The first-quarter expansion was 12%, from a very low base at the start of 2009, and the first-half expansion was 10.6%.

Other drivers include the government's decision to keep the value-added tax rate at 7% _ it had an option to raise the rate to 10% _ for another two years; lower domestic retail oil prices, continued export growth in July and new capital under Thai Khem Khaeng investment scheme injected into the economy.

Higher consumer product prices, political uncertainty, several unexploded bombs found in Bangkok yesterday, and the further baht appreciation remain the key concerns of consumers, said Mr Thanavath.

The baht is also a concern as people feel it may hurt exports and tourism.

The research house estimated that if the currency strengthens to 30 to the dollar it could cost Thailand's exports and tourism as much as 100 billion baht.

http://www.bangkokpost.com/business/economics/195535/consumer-confidence-at-44-month-high