InfoQuest (April 9, 2020) -- The Center for Economic and Business Forecasting of University of the Thai Chamber of Commerce (UTCC) revealed that consumer confidence index (CCI) in March dropped to 50.3 from 64.8 in February, the lowest in 21 years and six months.
According to the report, the overall economic sentiment index fell to 41.6 in March from 52.5 in February, the employment sentiment index fell to 49.3 from 61.4, and the future income sentiment index fell to 59.9 from 80.4.
The decline reflected the public's concerns over the COVID-19 outbreak. As infections increased, the Thai government declared a state of emergency to prevent the spread of the virus and ordered the closure of shopping centers and other places, which has led to bankruptcies, layoffs, and job losses. The economy has inevitably been hit. The Monetary Policy Committee (MPC) cut its forecast for Thailand's economic growth to -5.3 percent in 2020 from 2.8 percent. If the outbreak goes unchecked and becomes as severe as Italy's, Thailand's economy will slow further, but is expected to return to 3 percent growth by 2021.
There are also concerns that the drought could affect crop output and incomes in various regions. Thailand's exports fell by 8.24 percent and imports fell by 4.30 percent in February, resulting in a trade surplus. Prices of agricultural products, particularly rice, rubber and cassava, remain low, so do the incomes of most farmers, preventing a surge in the purchasing power of consumers in local provinces (excluding Bangkok).
However, there are some positive factors. The MPC voted 4:2 to maintain its policy rate unchanged at 0.75 percent. The policy rate had already been cut by 0.25 percent at a special meeting on March 20, largely because the MPC viewed that the outbreak would cause the economy to show a sharp downward trend compared with the previous year and that the headline inflation was likely to be negative. The financial system as a whole remains stable, and financial markets are gradually returning to normal. The government has also rolled out measures to mitigate the impact of the virus on the public and businesses. In addition, domestic retail oil prices fell.
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