Thai consumer confidence at highest level in two years

Optimism about the overall economy, job opportunities and future income drove Thai consumer confidence to its highest level in 25 months, according to the University of the Thai Chamber of Commerce, as the government said last week it is planning on spending big next year to propel economic growth into an even higher gear.

Thanavath Phonvichai, vice-president for research at the university, said consumer sentiment improved across the board concerning the domestic economy, but consumers remain cautious about spending because they are uncertain about the global economy and international instability. Higher levels of consumer spending would contribute to higher levels of economic growth.

The consumer confidence index rose to 77 points in April, up from 72.3 in November. Last June, the index dipped to a 25-month.

“We expect consumer consumption to clearly recover late in the second half of the year,” Thanavath said. Factors that would push confidence higher would be the government injecting a planned $5.4 billion in the mid-year budget to finance local development, and if global economic volatility eases and exports and commodity prices continue to rise.

Thai consumers still do have concerns about the domestic economy, Thanavath said. These include the higher cost of living, rising prices for consumer goods and domestic oil, along with relatively low prices for certain crops, particularly rice.

He said that the government is being urged to spend more and also accelerate the development of the Eastern Economic Corridor. The corridor near Bangkok will be a home for 10 industries the government is promoting as part of its national strategy to transform Thailand into a more advanced society and economy.

Last week, the Cabinet approved the government’s budget bill for fiscal 2018, which begins in October. The $83 billion budget includes a deficit of $13 billion. Deficit spending to stimulate economic growth is a common tool of governments. Thailand’s fiscal position is still sound enough to support deficit spending, according to the most recent reports by international ratings agencies.

The budget contains $19 billion for spending on investment in the next fiscal year to finance a menu of infrastructure projects such as double-track rail lines, expanding airport capacity, and extending the mass-transit system in greater Bangkok.

The Ministry of Education received the largest share of the budget with $14.6 billion, more than double the $6.3 billion designated for the Ministry of Defense.