BANGKOK- Thai consumer confidence fell for the first time in 14 months in July, amid a slow economic recovery and worries over potential instability with political parties still struggling to form a government after elections in May, a survey showed on Friday.
The consumer index of the University of the Thai Chamber of Commerce fell to 55.6 in July from 56.7 in June, the university said in a statement.
Consumers were worried about uncertainty over the formation of a new government and its stability, while the high costs of living remained a worry, university president Thanavath Phonvichai told a briefing.
“People are not sure when a government will be formed, who will do it and what will happen next,” he said. “That makes them reluctant to spend”.
Southeast Asia’s second-largest economy might have seen circulating money drop by 50 billion baht to 80 billion baht ($1.42 billion to $2.28 billion), reflecting tepid sentiment over the past two months, he said.
“If confidence does not improve, the economy could grow less than 3.5 percent this year, probably just 3 percent to 3.3 percent ,” Thanavath added.
Consumer confidence should pick up if a government is formed by early September, he said.
The political uncertainty emerged after conservative and pro-army lawmakers blocked efforts by the election winner, the Move Forward party, to form a government.
The second-placed Pheu Thai party, subsequently took the lead in trying to form a government. On Thursday, Pheu Thai receieved a boost as a senior member of a rival, military-backed party pledged support to try to end months of deadlock.
Tourism, however, continues to support the economy with over 15 million foreign arrivals booked from January to July. The government is expecting at least 25 million tourists this year.
Thailand has long been a popular destination for foreign tourists, and it received nearly 40 million visitors in pre-pandemic 2019.
Thailand’s economic recovery remained on track in June as the tourism sector expanded on higher foreign tourist arrivals while exports declined, the central bank said on Monday. -Reuters
