Thai consumers cut back discretionary spending

January 20, 2017

by: FT Confidential Research

• The FTCR Discretionary Spending index for Thailand fell in the fourth quarter, but spending is expected to bounce back because the drop was likely to have been caused by mourning for the late king. The Consumer Borrowing index also slipped quarter on quarter.
• Despite the falls, FTCR indicators suggest growing consumption and modest but rising optimism about the economy.

Survey data indicate that Thai discretionary spending growth slowed in the fourth quarter of 2016. The Discretionary Spending index for Thailand dropped to 55.3, its lowest point in more than two years, from 63 the previous quarter (see chart).

Meanwhile, the Consumer Borrowing index also slipped slightly, to 60.1 from 62.7 in the third quarter.

The declines appeared to be related to a one-off scaling back in shopping and leisure spending following the passing of King Bhumibol Adulyadej in October, and discretionary spending is expected to rebound in 2017. In the weeks after the king’s death, some shops, restaurants and particularly bars closed or reduced opening hours, and many Thais spent more time at home.

FTCR’s forward-looking indicators reflect rising consumer confidence, even as Thais continue to rate the state of the economy as very poor. In the fourth quarter the Economic Sentiment index climbed to its highest point since late 2014, while the Auto and Motorcycle Purchase indices also improved. These and other data suggest consumption will strengthen in the first half.

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. Our team of researchers in these key markets combine findings from our proprietary surveys with on-the-ground research to provide predictive analysis for investors.