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[ 2015-01-08 ]

Thais buoyant as oil prices slide


THAIS ARE BECOMING upbeat about the economy this year, as plummeting oil prices are leaving more baht in their pockets to splurge, especially on big-ticket items.

"Thai consumers have higher confidence because of lower fuel prices. Since oil prices started to decline in June, Thailand could save up to Bt10 billion a month. Consumers now have greater confidence to spend more on other things," Thanavath Phonvichai, director of the Economic and Business Forecasting Centre at the University of the Thai Chamber of Commerce, said yesterday.

The university's Consumer Confidence Index improved from 79.4 points in November to 81.1 in December - the highest in one and a half years since July 2013.

The rise was attributed to lower oil prices in the global and domestic markets, policy-makers' steady course on the benchmark interest rate and the cooperation of the private sector with the government to cut consumer-goods prices temporarily during the New Year's celebration.

With lower expenses for energy, people will have more money to spend on other things. Domestic spending will be one of the key engines of growth this year.

The university's survey of 2,241 consumers found that they feel better about purchasing a new car or house, travelling and starting an investment.

The index for a suitable period to buy a new car turned up last month to 102.3 points for the first time in four months and stayed above 100 points, the neutral baseline.

Oil in the global market could slide to US$40 per barrel in the first half of the year, so the domestic oil price could sink further by Bt2 per litre.

Although confidence is on the rise, consumers hold lofty expectations for future economic growth, so the government will need to accelerate disbursement of the state budget and reverse the slide of agricultural prices very quickly. The global oil-price trend could affect the prices of agricultural crops, mainly rubber, which will continue to be the government's challenge to solve this year.

Other risks are uncertain global economic growth, particularly in Russia, sagging stock-market indices and continued high prices of goods and cost of living.

GDP expansion

With reviving consumer sentiment, as well as the government's stimulation of the economy through investment, gross domestic product is forecast to expand by 2.5-3 per cent in the first half of the year, then pick up the pace to 4.5-5 per cent in the second half.

Cheaper oil will keep inflation down to about 1.5 per cent this year, while monetary policy is expected to keep its status quo, Thanavath said.

Wachira Kuntaweethep, assistant director of the centre, said confidence in employment opportunities advanced from 73.1 points to 74.6 last month, while confidence in future incomes gained momentum from 96.3 to 98.3.

Confidence in the political situation jumped last month to above the 100-point mark for the first time in nine years, at 100.1 points, showing that consumers have a slightly positive outlook on the current circumstances.