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Chamber worries over populist campaigns

The Thai Chamber of Commerce (TCC) has expressed strong concern over populist policies launched by political parties that it says will undermine consumer and investor confidence.

Such policies will not solve worrying economic problems or promote sustainable development, it said.

Although the Thai Consumer Confidence Index (CCI) climbed last month for the first time since January to 80.4 points, academics and businesspeople worry that the index could easily slip after the election as the parties’ economic policies focus on shortterm development.

“None of the parties have focused on longterm development and solving certain problems such as the rising cost of living, higher fuel prices and preventing the impact from a second global recession,” said TCC vice chairman Chatchai Boonyarat.

“They have just promised to spend a lot of money to lower the cost of living and pay lowincome earners without having any longterm plan to boost economic fundamentals.

“Notably, foreign investors have shown their concern over the coming new government and its weak policies on economic development by selling their stocks on the market,” he said.

Chatchai said consumers and foreign investors were doubtful about the government’s ability to boost economic growth, as the parties were only interested in winning easy votes.

A survey by the University of the Thai Chamber of Commerce (UTCC) showed that consumer confidence increased slightly last month from 79.6 points in April.

The upcoming general election, which is expected to boost economic growth, was the main factor driving the trend.

Also boosting confidence were lower fuel prices, strong export growth, stable agricultural commodity prices and the weakening baht.

However, the director of the UTCC Economic and Forecasting Centre, Thanavath Phonvichai, pointed out that the CCI could drop again next month on concerns over the higher cost of living, political stability and a hiccup in the global economic recovery.

The June CCI will be a key illustration of whether consumer confidence will raise stability in the remaining months of the year, as the party campaigns will be highly focused on how to boost the economy in the weeks before the July 3 election, Thanavath said.

However, the UTCC expressed concern that higher inflation would erode consumer confidence in the future after goods prices rise.

Inflation in the second half of the year could climb to 5 per cent after averaging 3.45 per cent in the first five months of this year. The Bank of Thailand could increase the policy interest rate by another 75 basis points in the remaining months of the year to curb inflation, Thanavath said.

Other factors that could reduce confidence are higher inflation in other Asian countries, a debt problem in the European Union and rising oil prices.

Saowanee Thairungroj, vice president of the UTCC’s Research Division, said consumer confidence was very fragile because of higher goods prices and concern over the next government.

The UTCC survey showed that confidence in Thailand’s overall economy slightly increased from 70.5 points in April to 71.1 points last month. Confidence in job opportunities also rose from 71.1 points to 71.7 points, while confidence in future income was up slightly from 97.2 points to 98.5 points.

Source: The Nation

ThaiVest Editorial Team