Consuming with confidence
Surveys, line graphs, data detailing. The world and its economic health sometimes feels like it has been taken over and determined by people with clipboards who haunt street corners and badger passers-by for a few minutes of their precious time to fill in a survey.
In Thailand the pollsters appear to be just as prevalent as in more developed economies and in early March the research section of the University of the Thai Chamber of Commerce came out and said consumer confidence in the country had risen for the fifth consecutive month.
It seems as if the ‘herd’ is happy and confident, then the economy is likely to boom and prosper. If the ‘herd’ is not happy and is feeling pessimistic, then the economy, no matter if its fundamentals are strong, could be in danger of collapse.
Thankfully, in Thailand’s case, the economic fundamentals at present do appear fairly strong, and genuine economic data, rather than a consumer confidence survey, backs this up.
In the three months to December 2012, Gross Domestic Product (GDP) grew by a substantial 18.9 percent compared to the previous year. This is the fastest growth since Thailand started collecting this kind of data in 1993.
The economic growth was driven by manufacturing and construction as well as tourism-related sectors such as hotels and restaurants. Other important drivers of GDP growth were, naturally, government spending but this public sector factor was supported by strong private consumption and private investment.
The Chamber of Commerce noted the increase in the basic wage had helped stimulate purchasing power, and with almost full employment it’s not really a big surprise that a consumer confidence survey would prove to be so positive.
The problem with such a survey is that if the economy suffers a downturn, be it a brief or potentially long-term correction, then consumer confidence will no doubt drop. For example, the floods of late 2011 would not have produced a strong and confident consumer survey result.
Indeed, according to the Chamber of Commerce results, Thai consumers, despite their buoyancy, remain concerned by the strength of the baht (for example, the impact on inbound tourism from countries like the United Kingdom vis-à-vis sterling and the baht), domestic political stability (the still simmering tensions between the coloured shirts) and the slow recovery of the overall world economy.
Nonetheless, the consumer confidence survey showed that in general Thais believe the high level of employment will continue and job opportunities and prospects remain positive as the economy shows no sign of slowing into the foreseeable future.