Political protests hurt Thai consumer confidence

By Orathai Sriring and Boontiwa Wichakul

BANGKOK (BestGrowthStock) – Consumer confidence in Thailand fell in March, depressed by political unrest that could seriously damage the economy if it turns violent, and further weakness is likely in April, according to a university survey on Thursday.

The University of the Thai Chamber of Commerce said its consumer confidence index fell to 69.8 in March, the lowest since November, from 70.9 in February and a 21-month high of 71.9 in January.

Confidence had been rising since the middle of 2009 thanks to a recovery in the economy after a brief recession, but the latest flare-up in a five-year political crisis has dealt it a blow.

Prime Minister Abhisit Vejjajiva declared a state of emergency on Wednesday to control a four-week rally by supporters of ousted former premier Thaksin Shinawatra aimed at forcing early elections.

“Clearly the confidence index is likely to fall sharply in April as the political protest drags on. The economy will be affected if it turns violent,” university economist Thanavat Polvichai told a news conference.

“The protest has hurt tourism and spending and more damage is expected if it continues,” Thanavat said.

Confidence hit its lowest in over seven years in May last year, a month after the same “red shirt” protest movement sparked the country’s worst street violence in 17 years.

The protesters have occupied since Saturday a Bangkok district full of upmarket shopping malls and five-star hotels, such as the Grand Hyatt, operated by Erawan Group.

That has hurt the retail, restaurant and tourist sectors and persuaded some foreign visitors to stay away.

The tourist industry accounts for about 6 percent of the $264 billion economy, Southeast Asia’s second-largest, and directly employs 1.8 million people.

The economy grew 3.6 percent in the final quarter of 2009 from the previous quarter, its highest growth rate in 10 years.

Finance Minister Korn Chatikavanij told Reuters on Wednesday the protests might cause growth this year to be “significantly” worse than the ministry’s 4.5 percent forecast. [ID:nSGE636016].

The World Bank forecast on Wednesday that Thailand’s economy would grow 6.2 percent this year [ID:nSGN002342]. Private economists have forecast growth of 4-5 percent after a contraction of 2.3 percent in 2009.

Despite the political problems, consumer spending in some areas is still good: there were record orders for 27,878 cars at the two-week Bangkok Motor Show that ended this week.

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(Editing by Alan Raybould)

Political protests hurt Thai consumer confidence