Consumer confidence was on the rise, but could fall due to Omicron

Consumer confidence was at a nine-month high in December, but it could be pulled back down by the Omicron outbreak, the University of the Thai Chamber of Commerce (UTCC)’s Center for Economic and Business Forecasting (CEBF) said on Thursday.

“The sample group is worried that the Omicron outbreak will negatively affect Thailand’s economic recovery,” said Thanavath Phonvichai, the UTCC president.

The university’s consumer confidence index increased from 44.9 in November, to 46.2 in December.

Supporting factors include the Bank of Thailand’s decision to maintain the benchmark lending rate at 0.5 per cent, the prospect of continuous economic expansion in 2022 and 2023, the export expansion of 24.73 per cent in November, and the drop in Covid cases before the Omicron outbreak. 

Negative factors include concerns over the Omicron outbreak, the government’s decision to temporarily halt the Test and Go entry procedure, rising living costs and oil prices, and fears over political instability. 

Thanavath said the index is still below 100. He noted this indicates that consumers are concerned about the Covid pandemic. They are worried about its effect on both global and Thailand’s economic recovery, and its impacts on people’s purchasing power, tourism and exports.

He said that in order to increase consumer confidence, the government must be able to manage the rising costs of living, continue to impose relief and stimulus measures such as the co-payment scheme, avoid lockdowns and then invest in infrastructures when the outbreak situation improves.

“The Thai economy is still strong enough to withstand Omicron and we expect the economy to begin to recover in the second quarter,” he said.

Thanavath added that the temporary cancellation of the Test and Go scheme will cost Thailand 50 billion baht in tourism income if the scheme is reintroduced within the second quarter of 2022.

If the T&G scheme is halted for the entire year, Thailand’s GDP growth will not exceed 3 per cent this year, based on the expectation that inflation will stay around 2-2.5 per cent in the first half of the year and 1-1.5 per cent in the second half.

Deputy Prime Minister, and minister of energy, Supattanapong Punmeechaow said on Thursday that the government will maintain the inflation level within the 1-3 per cent target range, compared to 7 per cent in the United States.

He also said that the rising food and commodity prices situation is temporary because of the higher global demand and the disruption in the production of some products.

“We do not want the public to concentrate only on the prices of some products, but to look at the entire picture in terms of the inflation rate,” Supattanapong said while referring to higher pork, chicken and egg prices. 

“We will try to cap the prices where we can and where there is a market mechanism problem, we will increase the level of production there,” he added. 

He also said the government is looking to introduce phase four of the co-payment scheme and other stimulus measures, including investment projects.

But despite the potential fall in confidence,  UTCC president Thanavath believes better times still lay ahead. 

“We still expect the economy to expand by four per cent in 2022 as previously forecasted based on the assumption that the Omicron outbreak will begin to unravel within January,” Thanavath said. 

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