Chinese New Year spending to fall again

Tops and Central Food Hall are offering products at discount prices for Chinese New Year.

Thai spending during the Chinese New Year festival, which starts on Sunday, is expected to remain tepid because of a moribund economy and pricier products.

In its annual survey of consumer spending during Chinese New Year, the University of the Thai Chamber of Commerce (UTCC) predicted a third consecutive decline to an 11-year low of 39.6 billion baht, down by 11.8% from 44.9 billion in 2021, and a dip from 57.6 billion in 2020.

Thanavath Phonvichai, the UTCC president, attributed the lower spending to consumer concerns about economic prospects, rising product prices, the ongoing pandemic and higher household debts.

“Lower consumer spending of more than 5 billion baht during the 2022 Chinese New Year is expected to result in a drop in GDP by 0.05 percentage points,” said Mr Thanavath.

“The government’s latest spending stimulus packages, including the Shop Dee Mee Khuen [shop and payback] scheme and the fourth phase of the Khon La Khrueng co-payment subsidy scheme, may help offset the drop. But a surprising cut in the cash handout of the co-payment scheme to 1,200 baht per person from 1,500 baht in previous phases is estimated to decrease money circulation by 18 billion baht, lowering GDP growth by 0.15-0.2 percentage points.”

He said if the government can contain Covid-19 outbreaks in the first quarter this year and more effectively stimulate the economy to restore consumer confidence, the country is expected to have a healthy recovery.

Regarding more expensive products, Mr Thanavath said the main cause was rising production costs driven by higher oil prices and transport costs.

The situation is expected to ease if the government comes up with measures to cut production costs for manufacturers and business operations as well as reduce people’s cost of living, he said.

In a related development, the university’s survey also found people with an income of less than 20,000 baht per month are expected to experience more hardship and debt problems.

This group is projected to cope with the debt burden for another 18 months if they have no additional income.

Mounting calls for a hike in the minimum daily wage are likely to put pressure on the Thai economy, and may prompt entrepreneurs to cut staff levels, said the survey.

However, Mr Thanavath said the UTCC does not think it is necessary to downgrade the country’s economic growth forecast from 3.5%, with inflation at 2%, as the central bank’s Monetary Policy Committee is expected to consider raising policy rates by the third quarter of this year.

“The Thai economy remains at risk of slower growth given growing pressure from rising oil prices,” he said.