Household confidence up as analyst urges more consumption
Household confidence will be key to spurring more growth in the Thai economy, according to a United Nations economist who said last week that increased consumption is important to counterbalance external shocks related to the weak world economy and China’s economic slowdown. His views correspond to those of Thailand’s economic czar Deputy Prime Minister Somkid Jatustripitak.
Thailand and other export-oriented countries in the region were all suffering because their economies are closely tied with the value chain in China, said Hamza Ali Malik, chief of the Economic and Social Commission for Asia and the Pacific’s (ESCAP) macroeconomic policy and analysis section. ESCAP is the regional headquarters of the United Nations and its offices are in Bangkok.
“The key is to boost domestic demand and try to lean away from some external demand,” he said. Thailand should focus, however, on increasing wages to spur consumption because household debt is already high, he added.
The increase in household confidence was measured in an index published by the Kasikorn Research Center associated with Kasikorn Bank. The index, based on a survey last month, showed that households’ economic expectations for the next three months increased to 46.5 points, the highest figure in six months, said Kangana Chockpisansin, head of the macroeconomic research department. The baseline is 50.
Kangana cautioned, however, not to expect a dramatic improvement in the household confidence index because a drought is still affecting incomes of those in the agricultural sector. This sector will need government help before its household incomes begin to rise.
Also, if China’s economy slows further, that would probably delay Thailand’s economic recovery and then confidence could decline again, she said.
Thailand’s strong tourism sector performance coupled with the government’s stimulus packages could help offset declines in growth because of China’s reduced demand for Thai goods. Kasikorn Research Center is forecasting the economy will grow this year by 2.8 percent.
The Ministry of Finance said last week, however, that it is still hopeful growth for the year will reach 3 percent, mainly because of the stimulus packages. Somchai Sujjapongse, permanent secretary of the ministry, said its Fiscal Policy Office (FPO) had maintained its forecast economic growth of 3 per cent.
“Overall, the Thai economy may not expand well. However, we still expect next year to be good.” he said.
Thailand Focus, Week of October 13, 2015
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