December 29, 2016 10:00 am JST
FT Confidential Research

Thai consumers expected to fuel growth in 2017

FT Confidential Research survey finds increasing economic optimism in fourth quarter

  • Our forward-looking Economic Sentiment Index rose in Thailand for the second consecutive quarter, as did our Political Sentiment Index for the country.
  • Far more Thai respondents continue to rate the present state of the economy negatively than positively but the difference has narrowed slightly.
  • Although the Thai economy remains sluggish by regional standards, growth is likely to improve next year on the back of stronger consumption - despite the king's recent death and the mourning period that followed - and increased government spending.

FT Confidential Research's fourth quarter consumer survey suggests that Thais are more hopeful about the economy than they have been since the first quarter of 2015. Our Economic Sentiment Index, which measures expectations for the coming six-month period among our respondents, rose to 59.7 in the fourth quarter, up from 56.5 in the third, a second consecutive sequential improvement (see chart).

Our index for a parallel survey of political sentiment improved to 67.6, from 64.6 in the third quarter, its highest reading since late 2014.

At the same time, far more of the Thai consumers we survey rate the present state of the economy as "bad" or "very bad" than "good" or "very good", though the readings have improved from earlier in 2016 (see chart).

The optimism captured by our survey of economic sentiment should be viewed in the context of such negativity. Respondents may feel that things can only get better.

We collected our fourth quarter data during the month of November, following the death of King Bhumibol Adulyadej on October 13. Our findings strongly suggest that the royal transition and the mourning period will not have a lasting negative impact on consumption. More anecdotally, we have rarely - if ever - seen Bangkok's malls or shopping streets busier than they are this December, though foreign tourists are a major contributor.

Looking towards 2017, private consumption growth appears likely to improve. Government stimulus programmes, including cash handouts to farmers, will help, as will a more positive outlook for agriculture. Prices appear to have bottomed out for rubber and rice, which will boost earnings prospects for farmers. Auto sales could also increase for the first time in five years now that the hangover from the 2012-2013 first-car tax rebate scheme has largely passed.

This article was first published on Dec. 20 by FT Confidential Research.

FT Confidential Research is an independent research service from the Financial Times, providing in-depth analysis of and statistical insight into China and Southeast Asia. A team of researchers in these key markets combine findings from proprietary surveys with on-the-ground research to provide predictive analysis for investors.

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