Political uncertainty has had a direct negative effect on consumer spending, investment and the tourism business. According to a recent survey by the Bank of Thailand (BOT), as reported by The Nation, overall business confidence, which started to drop in the final quarter of last year, has continued to fall.
The central bank’s survey report said, “Consumer purchasing power had decreased [as] household debt had risen, but people’s income was still dropping.” Meanwhile, the prolonged political situation has also impacted consumer expenditure, with people generally delaying their spending plans.
The property sector has been adversely affected by the above factors. Its lacklustre performance also reflects the fact that commercial banks are restricting the provision of mortgages out of concern about loan quality at a time when purchasing power has diminished.
The BOT survey also found that tourism took a bit hit, especially after the caretaker government introduced a state of emergency. Not only did foreign visitors delay or cancel their plans to visit Thailand, organisers of international exhibitions and other large-scale events postponed their Thai functions.
Despite this outlook, the BOT reports that corporate confidence is higher concerning business prospects for the second quarter; many businesses have adopted a wait-and-see approach to the country’s economic situation and political uncertainty.
Also, the survey found that the export sector was more positive about new orders in the second quarter than in the first three months of the year, thanks to a recovery in the global economy. This includes businesses exporting electronics and machinery for the auto industry, and those selling rubber, for which orders from China are expected to rise.
