Consumer confidence up

"A prolonged outbreak could deteriorate consumer confidence this month and the upcoming months. Last month's increasing consumer confidence could easily drop in the next survey if the government cannot control the situation well," Thanavath Phonvichai, director of the University of the Thai Chamber of Commerce's Economic and Business Forecasting Centre, said yesterday.

The consumer confidence index rose last month as did all related confidence indexes, thanks to the passage of the Bt400-billion economic stimulus bill and the return of relative calm to politics.

Based on 2,245 responses to the UTCC's nationwide survey, the consumer confidence index rose from 71.5 points in May to 72.5 points in June, while confidence in the overall economy advanced from 64.3 to 65.4.

Confidence in future income improved from May's 86.2 points to 87.4 last month, while confidence in future employment increased slightly from 63.8 to 64.7.

However, respondents were greatly worried that the flu outbreak had the potential to depress tourist and consumer spending in the country.

Thanavath said that if the flu outbreak could be contained by the end of this month or next month, the economy and tourism could recover next quarter. But if not, the economic recovery would be delayed to next year as tourist arrivals fall off.

If Thailand received a half million to one million fewer tourists, then it would lose about Bt15 billion-Bt30 billion in tourism income, he said.

However, the government had little choice but to close down public centres temporarily and encourage people to take the flu vaccine, he added.

Phongsak Asskul, vice chairman of the Board of Trade and the Thai Chamber of Commerce, said many foreign tourists could turn to other countries during the peak season in the fourth quarter if the government has not seriously kept the outbreak in check.

"Businessmen are afraid that the outbreak will affect their transactions and the country's economic growth," he said.

Saowanee Thairungroj, the university's vice president for research, attributed the index's rise last month to Parliament's approval of the Bt400-billion budget for reinvigorating the economy.

But consumer confidence is still vulnerable to many negative factors, such as the Bt2-a-litre hike in domestic retail oil prices last month, the novel influenza scare and high consumer good prices.

Although the indexes were rosier last month, they were still weak, remaining well below the 100 threshold.

Consumers still believe this is not a good time to purchase new houses or cars, make new investments or go on trips.

The survey showed that the "gross domestic happiness" index climbed from 87.9 points in May to 89.3 last month, but the drug trade and high living costs were still problematic, he added.