The UTCC’s report for January shows the consumer confidence index fell to 80.4 points from 81.1 in December, which was the highest since 81.6 in June, 2013.
The drop is blamed on low rice and rubber prices as well as weak export growth in January.
“Consumer confidence turned abruptly pessimistic last month after the New Year celebrations,” said UTCC Vice President Thanavath Phonvichai.
“Despite lower petrol prices bringing down the overall cost of living, there is still a lack of confidence due to the economy recovering slowly, which has weakened purchasing power upcountry,” said Thanavath.
“The length of time needed to make a full recovery depends on government disbursement to boost the economy at a time when exports and tourism have yet to recover fully,” he said.
In response to the slow down, Prime Minister Prayut Chan-Ocha has assigned the Commerce Ministry to evaluate product prices and stimulate spending, especially in the tourism and export sectors.
The UTTC president said the Prime Minister’s actions shows that the government has started acknowledging that economic recovery may be slower than expected.
The government must therefore work out measures to help ease the cost of living for low-income earners, inject new money to spur the economy and address unemployment during the dry season, he said.
“Amid high household debt pressure, we don’t expect people’s consumption to recover in the first quarter, as was earlier expected,” said Thanavath.
However, Mr Thanavath was confident that tourism income would be given a boost on Valentine’s Day and during Chinese New Year, adding that government investment of B100-150 billion in mega projects this year would also shore up economic growth.
Despite the early downward trend, Mr Thanavath said the UTCC was maintaining its full-year forecast for economic growth of 3.5 to 4 per cent, predicting export growth of 1 to 2 per cent.
“As long as there are no more demonstrations and politics remains muted, we still believe GDP can manage growth of between 3.5 to 4 per cent this year,” said Thanavath, whose predictions are in line with the Bank of Thailand, which is predicting 4 per cent growth for 2015; up from its estimate of 0.8 per cent last year.
According to the International Monetary Fund, Thailand’s GDP grew by just 0.5 per cent last year but is set to improve to 3.5 per cent this year.