Consumer confidence in Thailand hit an 18-month high in December, a university survey showed, helped by low inflation, reduced gasoline prices and government payments to rice farmers. The consumer confidence index of the University of the Thai Chamber of Commerce rose to 81.1 in December from 79.4 in November. It was the highest since June 2013 when the index was 81.6. In line with guidance from the military government and thanks to a drop in global crude prices, retail gasoline prices were trimmed in December. That helped lower the cost of living and raise consumer purchasing, the university said. The university also attributed higher consumer spending in the month to government subsidies to rice farmers.
“Consumer confidence in December was the highest in 18 months and back to a level before the domestic political unrest,” Thanavath Phonvichai, an economics professor at the university that did the confidence survey, told a news conference. “Lower oil prices helped increase disposable incomes and people felt more confident to spend, especially during the New Year season,” he said. “Government’s acceleration of budget spending and investment could lift confidence in coming months.
” Yongyuth Chalamwong, the Director of the Thailand Development Research Institute, also says he’s confident the economy will grow by 4% in 2015 as a result of the military government’s investment projects and what he predicts will be a more stable political climate, state media reported. Director Yongyuth said he also believes new investment projects pursued by the military government will lower the unemployment rate to around 1%. Thailand’s economy, Southeast Asia’s second largest, expanded only 0.2 percent in the first nine months of 2014 from a year earlier due to weak exports and subdued domestic demand.
The central bank last month slashed its 2014 economic growth forecast to 0.8 percent from 1.5 percent and 2015 projection to 4.0 percent from 4.8 percent. Consumption, which accounts for half of gross domestic product (GDP), is only slowly picking up, curbed by high household debt levels. High debt is one reason the central bank has kept its policy interest rate on hold at 2 percent since March. Annual headline inflation in Thailand was a more than fiveyear low of 0.60 percent in December. The junta, which took power in May, is banking on big infrastructure projects to help the economy as sectors badly hit by prolonged political turmoil, such as tourism, are recovering slowly.
