Published on June 24, 2005

It is reasonable for Thailand to get panicky about the Customs Department’s preliminary import-export figures for May. Despite the government’s insistence the economy will soon improve, the figures fly in the face of such assurances.

In fact, it looks like we’re in a nosedive. The projected trade deficit is US$929 million (Bt38 billion), and that would make it the fifth month in a row of such discouraging figures.

Given that interest rates might soon be jacked up, the property market is already slowing down. Meanwhile, the hotel industry, particularly in tsunami-hit areas, is not recovering. Even though this is the low season, an average occupancy rate of 20 per cent in Phuket is shocking.

Worse, the spiralling oil prices are pushing the operating costs of companies ever upwards. Common sense tells us cost-cutting measures are probably just around the corner, and that they might include lay-offs.

With a decided lack of good news, is it any wonder that about 50 per cent of Thai consumers reckon the economy has deteriorated in the past six months? That’s what a recent online survey by ACNielsen showed.

With the Thai New Year having recently passed at the time of the survey, Thai consumers’ holiday appetites remained strong, with 56 per cent choosing to spend their spare cash on holidays or away-from-home entertainment. But while that spending accounted for 45 per cent of their spare cash, they chose to spend another 40 per cent on new clothes and new technology.

No wonder the mobile-phone market is vibrant while staffers at many hotels in the provinces are barely managing to stifle yawns.

The government might like the fact the survey revealed about half of Thailand’s consumers are confident about their job prospects in the next 12 months. But it must cringe to read that only a third of consumers think the Kingdom’s economic performance in the past six months has improved.

Looking ahead to the next 12 months, Thai consumers’ expectations for the economy remain split between “it will improve” (35 per cent) and “it will deteriorate” (37 per cent).

Unsurprisingly, only about one-third consider now a good time to spend.

Given that the remainder prefers to save, the government should be glad Thais have adopted savings habits. Such behaviour certainly didn’t exist before the 1997 financial crisis. The only problem is that the economy really needs a big boost, mainly through consumer spending.

That might explain why the government has devised a plan to spend lavishly in the next budget year. It apparently doesn’t want the economy to sink further into gloom.

achara_d@nationgroup.com

Post your comment to this story here