Businesses optimistic of stronger economy next year, survey finds

Economy August 19, 2016 01:00



THAI businesses are optimistic of economic growth next year as the service and industrial sectors boom, while their confidence that the economy will improve during the final two quarters of this year is also rising, a survey by the University of the Thai

The recent bombings in several provinces south of Bangkok should not dent the Thai economy, but will have short-term impacts on people’s confidence and the retail sector.

In its survey of 600 enterprises, the UTCC found that businesspeople still had confidence that the economy would grow more strongly next year on rising sales in the tourism and service sectors, followed by the manufacturing sector. However, the agricultural sector has not brightened much yet despite higher crop prices, as farmers still have low incomes compared with several previous years.

“The Thai economy is heading towards more expansion in the second half of this year and next year. Businesses have foreseen that their incomes are [will be] on the rise as they expect more orders in the following [remaining] quarters and through next year,” said Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre.

The centre believes that the bombings will only cut growth in gross domestic product by 0.05-0.07 percentage point, causing a loss of Bt8.38 billion to Bt10.57 billion to the economy. Income in the tourism sector will shrink by Bt6.05 billion.

Overall, the UTCC has maintained its GDP growth forecast for this year at 3.3-3.5 per cent.

Thanavath said the bombings would result in consumers and tourists being more cautious in their daily travels, and would affect retailers for only a month or two. The incidents should not affect travelling during the high season in the Southern region.

During the short-term impact period, retail-sector sales in the South will decrease by Bt75.38 million a day. The total number of foreign visitors to the Kingdom should not be affected, while fewer than 125,000 tourists will cancel their bookings in the southern provinces, and some of them will return in the near future, he said.

The centre says the Business Confidence Index for this year is averaging 98.3 points, while the confidence index for next year is up to 119.5 points. A score higher than 100 points reflects strong confidence.

Businesspeople also foresee that sales, employment and orders will all increase next year. However, profits will not rise significantly as the costs of production are also climbing.

The survey also found that the fluctuating exchange rate was a concern, particularly for export enterprises and manufacturers. They said the appropriate value of the baht was around 35.5 per US dollar.

The poll also showed that most enterprises have little understanding about the government’s “Thailand 4.0” policy, which will focus on innovation and high technology.

The survey found that 55.4 per cent of businesspeople have only a dim understanding of the policy, 26.7 per cent have moderate understanding, and 17.9 per cent have high understanding.

Respondents called for the government to support human-resource development, solve obstructions to trade, and encourage product quality that meets international market standards.