Little growth predicted for second half

The retail industry is expected to show little sales improvement in the second half of the year after estimated low growth in the first half.

Overall retail sales are estimated to show reduced growth of 4-5 per cent in the first half, said Thai Retailers Association president Thanapon Tangkananan.

He said the retail industry was expected to see a slight improvement in the second half following the economic-assistance package announced this week by the government.

"The growth of local retail sales in the second half will depend on several factors, such as how the current political conflict will be settled, the trend in petrol prices and the government's policy of controlling high inflation," he said.

Thanapon said the retail-sales situation would also depend on external factors like the dispute between Iran and Israel.

The government on Tuesday announced a Bt40-billion welfare-cum-economic-stimulus package designed to alleviate the rising cost of living, particularly among low-income earners.

The package includes a reduction in the excise tax for gasohol and diesel, a price-adjustment suspension for cooking gas for household use, a reduction in water and electricity charges and free travel on all third-class trains and half of the Bangkok Mass Transit Authority's 1,600 non-air-conditioned buses.

Thanapon said since the government just announced the package, it remained to be seen whether it would improve the economy. While it can reduce low-income earners' cost of living, they may not spend the money they save in ways that contribute to economic growth.

"We saw a growth trend in first-quarter domestic retail sales, which rose 5-6 per cent year on year. But retail sales declined year on year in the second quarter," said Tesco Lotus senior vice president Darmp Sukontasap.

"It's clear that the objective of the assistance package is to provide relief for low-income earners, especially those in Bangkok, who are suffering from soaring inflation, which is making a significant impact on their everyday cost of living."

The success of the programme, of course, would depend on the mechanics involved in the implementation of the programme, he said.

Darmp said government efforts to provide relief to the low-income segment were necessary, because in times of high inflation, income earners must either find a way to make their fixed income go further or earn more. Since the latter is more difficult to achieve, the government decided to try to make their hard-earned money go further by helping them reduce their daily expenses.

He said in the present economic climate, the government's task is to ensure that the economy continues to grow via continuous activity in all areas: investment, manufacturing, retail sales and public and private consumption. Therefore, a combination of both fiscal and monetary measures, for both the short and the medium term, are necessary and inevitable.

"But as I've said, the success of the programme will depend on the mechanics involved in its implementation," he said. "If it is successful, low-income earners will still be able to maintain their purchasing power. We, as retailers, are willing to support government efforts towards this end."