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Thursday March 6, 2014 MYT 5:20:02 PM
Thursday March 6, 2014 MYT 5:20:59 PM
by orathai sriring AND boontiwa wichakul
BANGKOK (Reuters) - Thailand's consumer confidence tumbled to a 12-year low in February, a survey showed on Thursday, highlighting the toll that prolonged political unrest is taking on Southeast Asia's second-biggest economy.
The economy has been nicknamed "Teflon Thailand" for its past resilience to turbulence, but consumer sentiment was weaker last month than it had been even after the devastating floods of late 2011, violent political unrest in 2010 and a deadly tsunami in late 2004.
After months of protests aimed at ousting Prime Minister Yingluck Shinawatra, Thais have become reluctant to spend and tourists are staying away, weighing on sales at automakers, property firms and hotels. The downward trend in spending is seen continuing in the coming months.
"People are worried about weaker purchasing power, smaller income and fewer new jobs. Consumption is likely to remain subdued until late in the second quarter," said Thanavath Phonvichai, an economics professor at the University of the Thai Chamber of Commerce (UTCC), which conducted the survey.
"There is no positive sign in the first quarter. It remains to be seen when a new government will be formed. If we have a new government and its policies in the second quarter, confidence will return," he told a news conference.
The UTCC's consumer confidence index fell to 69.9 in February - the lowest since November 2001 - from 71.5 in January. It was the 11th straight month of declines.
The survey showed that consumers' readiness to spend on new cars fell to its lowest in 26 months, underlining a recent sales slide in Thailand, Southeast Asia's biggest auto market. Auto sales dropped 45.5 percent in January from a year earlier after falling 7.7 percent in all of 2013.
PROPERTY FIRMS, HOTELS
Readiness to spend on new homes slid to its lowest in over 8-1/2 years, the survey also showed.
This has hurt property firms like LPN Development, Thailand's biggest condominium developer. The firm said on Thursday that it had cut its new project plans by half to only six or seven projects this year because of "the political and economic problems as well as our customers' situation."
Meanwhile, the number of tourist arrivals to the "Land of Smiles" rose just 0.06 percent in January from a year earlier, after growing about 20 percent in all of 2013.
Against this backdrop, Hotelier Erawan Group, operator of a five-star hotel in a busy Bangkok shopping area, this week cut its 2014 revenue growth target to just 2 percent from 10-15 percent. It said the unrest has dragged its occupancy rates in Bangkok down to 50 percent in the first quarter from 83 percent in the same period a year earlier.
"Travel warnings by countries will affect the hotel business in the first half. But we expect it to rebound quickly in the second half if the political situation eases," said Kanyarat Krisnathevin, executive vice president and chief financial officer at Erawan.
The protests are now in their fifth month, but at the weekend the remaining activists closed down several big protest sites and moved to a central Bangkok park. A state of emergency in the capital could be extended until the protests end completely.
Thailand held a general election on February 2 but it was disrupted by demonstrators, leaving a caretaker government with limited powers to borrow and spend. It may be a long time before a new functioning government can be installed.
Thailand's economy, Southeast Asia's second largest after that of Indonesia, grew just 0.6 percent in the final quarter of 2013 from the previous three months and a year earlier as the turmoil hit consumption, investment and tourism.
Last month, the state planning agency, which compiles gross domestic product data, cut its 2014 GDP growth forecast to 3-4 percent from 4-5 percent. The central bank recently said growth could be less than 3 percent.
In 2013, the economy expanded 2.9 percent, far below the 6.5 percent recorded in 2012.
(Additional reporting by Saranya Suksomkij; Editing by Chris Gallagher)
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