Business optimism deepens as economy keeps marching

Economy May 31, 2018 01:00

By WICHIT CHAITRONG
THE NATION

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A GAUGE of business sentiment across the regions suggests confidence in the economy is increasing, meshing with other positive indicators and a key business lobby’s dismissal of a potential hit on exports from Italy’s political crisis.



The Thai Regional Economic Sentiment Index (RSI) in May pointed to rising confidence in economy on a six-month outlook nationwide.

The rise in sentiment was most marked in the Central, Eastern and Northern parts of the country, said Soraphol Tulayasathien, deputy spokesman for the Finance Ministry, yesterday.

For the Central region, the RSI index was 91.4, reflecting businesses’ strong optimism on the outlook for the economy, driven by rising exports and an expansion in the manufacturing sector, Soraphol said.

Auto and part manufacturers based in Ayutthaya province had increased their production to meet rising global demand, he said. The province also benefited from an increase in the number of tourists drawn by the smash-hit soap opera "Love Destiny".

For the Eastern region, the RSI index was at 89.2, with respondents citing expanding investment, including in industrial production. The region has been blessed as the beneficiary of legislation for the Eastern Economic Corridor, which took effect recently.

 Investment also rose in the provinces neighbouring the EEC provinces of Rayong, Chon Buri and Chachoengsao. Soraphol cited the increased investment in hotels in Nakhon Nayok and in factories in Sa Kaew.

For the Northern provinces, the staging of national sporting events in Chiang Rai had contributed to the rising of confidence in that region. The RSI index was at 86.7, Soraphol said. Demand for industrial products in the domestic and export markets had also expanded production activities, he said. Another positive was the government’s implementation of a special economic zone in Tak province that boosted the regional economy, he added.

An index above 50 suggests more confidence in the future than at present, while a reading below that mark indicates a lack of confidence in the future. 

Sustained increases in exports also benefitted the Northeast, with a reading of 83.2 in the confidence index. Rising prices for maize, sugarcane and cassava root contributed to the expansion of the region’s economy.

Another boost comes from newly built factories in Ubon Ratchathani, Kalasin and Surin.

An increase in the number of foreign tourists contributed to rising confidence in the Western parts of the country. The RSI index for that region was 83.1. More tourists visited Ratchaburi, Suphanburi and Phetchaburi. Retail sales in the region also shows signs of rising. 

The South also shared in the benefits of the increase in tourism. More visitors went to new tourist attractions in Pattalung and many of them continued to visit the tourism mainstays of Phuket and Krabi provinces. The index was 69.1.

Soraphol said that other economic indicators pointed to continued growth in April, after gross domestic product expanded 4.8 per cent between January and March.

On the consumption side, car sales rose 17.2 per cent year on year, extending gains to 15 consecutive months. The collection of value-added tax increased 7 per cent. And collection of VAT from imported consumer goods saw a rise an impressive rise of 12 per cent from negative growth over a number of months previously. Imports of consumer goods rose 17.6 per cent.

On the investment side, sales of commercial cars rose 30.6 per cent and imports of capital goods, 3.4 per cent. Exports in US dollar terms rose 12.3 per cent, extending a winning streak to 14 straight months. Tourist arrivals came in at 3.09 million, up 9.4 per cent year on year in April. 

 Meanwhile, Supant Mongkolsuthree, chairman of the Federation of Thai Industries, said that the political crisis in Italy – with the fears for an impact on Europe – was not likely to affect Thailand’s exports. He believed that the European Union would rescue Italy if its economy suffered badly as a result of the political gridlock. 

Supant said the baht’s weakening to around Bt32 to the US dollar is good for the export sector. If it strengthens, back to Bt31, this would hurt exports, he said.