Thailand's retail sector is expected to post a heavy year-on-year sales drop of 4 per cent in the first quarter, due mainly to economic and political uncertainty.

"The forecast drop indicates a dangerous sign for our country and the sector," said Thai Retailers' Association president Thanapon Tangkananan.

On average, retail sales have increased 9-10 per cent in recent years, double the growth in the gross domestic product. They recorded double-digit growth in last year's first quarter.

With annual sales value of almost Bt1.2 trillion, the retail sector involves many players, including suppliers, entrepreneurs and grass-roots shops.

Thanapon said the gloomy forecast reflected negative sentiment among consumers, who have been challenged by many economic and political factors, as well as by volatile oil prices, which have dampened their purchasing power.

He suggested the government speed up its budget disbursement, in order to stimulate the whole economy.

With the government's fiscal year at the halfway point, only 20 per cent of the budget has been spent.

Thanapon said disbursement would boost the macroeconomic situation by creating jobs and income.

Tesco Lotus senior vice president Darmp Sukontasap said the economy had been hit by many negative factors that had affected local investment.

These included the Bank of Thailand's capital-reserve requirement, the New Year's Eve bombs, the Alien Business Act and the soon-to-be-implemented Retail Business Act.

"For Tesco Lotus, our first-quarter sales performance was in line with the slowing economy," said Darmp.

He added that the frenzied discount campaigns of major department stores indicated they were experiencing a weakening of consumer spending.

Tesco Lotus will this week launch one of its biggest promotions this year, "Roll Back to School", to mark the new school term.

Central Department Store experienced flat sales growth in the first quarter for the first time, due mainly to low consumer confidence.

It said several negative factors, including political uncertainty, had dampened the mood of consumers.

Generally, the company has recorded 10-per-cent growth in every first quarter, accounting for about 24 per cent of annual sales.

"It's the first time we've posted flat sales growth," said president Yuwadee Chirathivat Bhicharnchitr.

She added that the company would continue launching aggressive marketing campaigns, in order to achieve its targeted annual sales growth of 9 per cent this year.

Central Retail executive vice president Likit Fahpyochon said retailers in central Bangkok would feel the effect from the competition between huge shopping malls Siam Paragon and CentralWorld.

However, Likit estimated that the retail sector would post sales growth of 5 per cent in the first quarter, due mainly to branch expansion by the larger retailers.

He believes the retail sector will pick up in the third quarter.

Kwanchai Rungfapaisarn

The Nation