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Survey: Politics drags down Thai consumer confidence

June 5, 2012

BANGKOK: Consumer confidence in Thailand fell in May for the first time in six months because of worry about politics as anti-government “yellow shirt” protesters take to the streets again, the University of the Thai Chamber of Commerce said today.

Concern over problems in the euro zone, which could hurt the global economy and depress demand for Thai goods, also contributed to the dip in confidence.

After relative calm on the political front since elections last July, yellow-shirted People’s Alliance for Democracy activists blockaded Parliament last week and forced the government to postpone debate on a national reconciliation bill.

The protesters say the bill is aimed at allowing deposed premier Thaksin Shinawatra back home from self-exile.

“Politics is the main factor making people worried and the economy and oil prices are almost minor when compared to it,” said Thanavath Phonvichai, director of the university’s Centre for Economy and Business Forecasting.

“Politics will dictate the direction of Thailand’s economy for the rest of this year.”

Confidence was helped by government subsidies, including those for rail transport, and lower oil prices also helped boost sentiment, the survey showed.

The centre’s confidence index dropped slightly to 67.1 in May from 67.5 in April following five months that saw a steady rise in sentiment after the end of the country’s worst floods in half a century, which hit the country late last year.

Exports unexpectedly fell in April from a year earlier as industry continued to feel the impact of the flooding but the Commerce Ministry expects a significant improvement in the second half of the year.

A fall in the baht currency would help exporters, Prime Minister Yingluck Shinawatra told Reuters in an interview last Friday.

The baht fell 5% against the dollar in 2011 and is broadly flat this year. It stood at about 31.60 to the dollar today.

Consumer confidence has been helped by a 40% increase in the minimum wage that took effect on April 1 but industry has said it would hurt competitiveness and the central bank has warned about the risk to inflation.

Yingluck acknowledged the concern in Friday’s interview but stood by the policy, saying it would help people on lower incomes cope with a rise in inflation.

Yingluck’s government is facing growing criticism over plans to amend the constitution and a national reconciliation bill that are viewed by critics as veiled attempts to bring her brother, former premier Thaksin, back home.

Thaksin, a former telecoms tycoon toppled in a military coup in 2006, lives in self-imposed exile after fleeing in 2008 shortly before being sentenced to two years in jail for abuse of power. The reconciliation plan might allow him to return home without serving time.

Both the constitution and reconciliation plans were supposed to have come before Parliament this week but a court ruled last Friday to temporarily stop the charter debate and the Speaker postponed the reconciliation bill debate scheduled for today.

- Reuters


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