Retailers expect accelerating rebound in next two years
With consumption playing an increasingly important role in Thailand’s economy, the Thai Retailers Association said it expects growth in the industry to accelerate during the next two years as positive economic trends such as government infrastructure investment and stable farm prices result in a recovery of spending power among the middle class.
The retail industry is forecast to grow by 3.8 to 4 percent in 2018 and 4.5 percent in 2019, a steady but significant rise from the 3.2 to 3.4 percent expected this year, said Jariya Chirathivat, president of the Thai Retailers Association.
The Chirathivat family is the founder of the Central Group, which has interests in retail, restaurants, real estate, merchandising and hospitality. Central opened Thailand’s first department store in 1956 and today owns 61 department stores and 32 malls in the Kingdom as well as several more in Southeast Asia and Europe.
“The long-lasting economic slowdown that started in 2014 has bottomed out and stabilized. The economy is now recovering slowly,” Jariya said.
Economic growth, however, has been picking up steam this year, with the exports and gross domestic product rising faster than most economists had forecast at the start of this year.
“If economic variables such as politics, infrastructure investment and farm prices remain positive for a period, the economy will affect every sector of the base, which should result in a clear recovery of spending power for the middle class from the second to the third quarter of 2019,” Jariya said.
The Association said that retail growth was steady at 2.8 to 3 percent for the first nine months of this year, but most of the growth was concentrated in Bangkok and other big cities. Department stores showed only modest growth, Jariya said, because import taxes on luxury brands remain too high for the stores to offer significantly lower prices.
On the other hand, supermarkets, and health and beauty – which include beauty stores, drugstores, and health and personal care stores – showed more impressive growth.
More robust and evenly spread consumption would benefit the Thai economy by making it more resilient, enabling it to be less reliant on exports, especially when markets overseas are in recession or slowing down.
Jariya gave credit to the government of Prime Minister Prayut Chan-o-cha for implementing programs that put money in the pockets of lower income groups. Those programs help stimulate consumption, she said.
“That is on top of private sector promotions and sales activities throughout the long holiday season until January next year, which will put more money in circulation, resulting in a retail index that improves on expectations at the start of the year,’’ she said.