The poll in June resulted in the sixth straight monthly decline in the Consumer Confidence Index (CCI), inching down from 72.6 points in May to 71.6 last month, the lowest in 25 months. A level below 100 reflects weak consumer sentiment.

“The decline in consumer confidence was due mainly to worries about the impact of Brexit [UK citizens’ vote to leave the European Union] on the Thai economy and export growth,” Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre, said yesterday.

Besides weak consumer confidence, rising unemployment is also worrisome, as the jobless rate in May exceeded 1 per cent for the first time since 2010.

According to the National Statistical Office, the unemployment rate in May was 1.2 per cent, with about 300,000-450,000 people out of work. The average unemployment rate for the past five years was 0.6-0.9 per cent.

Higher unemployment reflected lower business income and the fragile economy from lower spending confidence. Enterprises have not created new employment, with the result that many new graduates could not find a job, Thanavath said.

He added that the recent case of Toyota (Thailand) laying off 1,000 employees had resulted from lower sales and a changing manufacturing structure to rely more on automation. This indicates that more unemployment could be seen in the future.

Based on the survey of 2,249 respondents, the CCI sub-index for the future dropped from 89 in May to 87.6 in June, while the sub-index on future incomes also decreased from 67.7 to 66.5.

Because of the weak consumer confidence, gross domestic product this year could grow more slowly than the previous expectation of 3-3.5 per cent, at 2.7-3 per cent.

The UTCC poll also found bad news for the retail industry, as consumers believe it is the worst time in almost seven years to buy a new car and the worst in more than two years to purchase a new house.

Respondents also did not want to invest in or start up a business or even travel anywhere, as confidence in those activities was at its lowest level in nine months.

However, there are some positive factors to encourage long-term consumer confidence as some crop prices have risen and drought-related problems have been relieved after the rainy season began in May.

Thanavath said consumer confidence could increase slightly as higher crop prices raise spending power among farming families, who account for the majority of the population.

To stimulate economic growth, he said the government needed to accelerate its budget disbursements and closely monitor fluctuating exchange rates, which could affect export growth.

According to Thanawat Polvichai, director of the University of the Thai Chamber of Commerce’s Economic and Business Forecasting Centre, the CCI stood at 74.7 points last month, down from 75.5 in January, the second consecutive month of decline.

Index scores below 100 indicate negative confidence.

The CCI pertaining to the current situation was 54.7, down from 55.3 in January. The index pertaining to future prospects was 82.7, down from 83.5 in January.

The overall CCI, which reflects views on the economy, stood at 63.5, down from 64.4, while the job-opportunities sub-index was at 69.7, down from 70.3, and the future-income sub-index was 90.7 in February, down from 91.7.

Consumers are concerned about the slow economic recovery, while drought could result in significantly less money in circulation, prompting calls for urgent government stimulus measures.

Negative factors contributing to the declining CCI included the National Economic and Social Development Board cutting its growth forecast for Thai gross domestic product to 2.8-3.8 per cent from 3-4 per cent, sluggish exports, weak prices of agricultural goods and rubber, a hazy global economic outlook, domestic political uncertainty, rising motor-fuel prices, a weak baht and a rising cost of living.

There were also positive factors, but they were not enough to overcome the negatives. They included the decision of the Bank of Thailand’s Monetary Policy Committee to maintain its key interest rate at 1.50 per cent and GDP growth in the fourth quarter of 2015 at 2.8 per cent, the same as for the full year, thanks to the government’s economic stimulus measures, and the rise of the SET Index.

Thanawat said severe drought this year was expected to result in Bt70 billion to Bt100 million less money in circulation, of which Bt50 billion to Bt70 billion would affect the agricultural sector. Drought has reduced off-season rice production and may also affect in-season production.

Meanwhile, the adverse impacts on trade and tourism are estimated at Bt10 billion to Bt30 billion, including to agricultural processing plants, farm machinery, fertiliser factories, seed producers, and visits to waterfalls and water parks.

The government has allocated Bt87 billion to help farmers cope with this year’s drought. However, it is necessary to get this financial assistance to the farmers before Songkran to coincide with the second-quarter economic stimulus measures in order to attain at least the 3-per-cent GDP growth target, and growth of 3-3.5 per cent for the full year.

The UTCC’s Economic and Business Forecasting Centre will again evaluate the country’s economic growth outlook on March 24.