» The Business Confidence Index fell 12 points in the Fourth Quarter of 2019

13th April 2020, Siam Ratings Agency Company Limited (SRAL) announced the result of the survey about WVB Business Confidence Index in the fourth quarter of 2019.

SRAL Co., Ltd. conducts the survey quarterly. The main objects of the survey are companies which have the most well- known brand, the largest number of Total Assets, Total Revenues and Employees. Being performed from the middle of February 2020 to the late in March 2020, the survey attracted 150 Companies which active in many different fields in Thailand, such as Agriculture, Automotive, Construction, Technology, Energy, Electronics, Telecommunications, Services… In particular, large and small enterprises accounted for over 90% of total enterprises participating in this quarter.

According to the survey, the Business Confidence Index (BCI) in the fourth quarter of 2019 reached 117 points, decreased by 12 points compared to the third quarter of 2019 (129 points), This shows that companies in Thailand have a negative perspective on the current economy. Most companies say that it is difficult to predict. Besides, many enterprises still have a positive attitude about economic growth.

Summary of investigation results of 6 components building Business Confidence Index (BCI) in the fourth quarter of 2019 as follows:

- On the general economic situation of Thailand today:

23.33% of surveyed enterprise claimed that the general economy of Thailand is now better than 12 months ago, 50.67% said that economic conditions in Thailand remain and 26.00% of businesses think that economic conditions in overall are worse than 12 months ago.

According to the National Economic and Social Development Council of Thailand (NESDC), The Thai economy in the fourth quarter of 2019 expanded by 1.6 percent, compared with 2.6 percent in the previous quarter (%YoY). After seasonally adjusted, the economy grew by 0.2 percent from the third quarter (%QoQ sa).

On expenditure side: the growth was supported mainly by continual expansions of private consumption and improving private investment while government spending, public investment and export of goods declined.

On production side: the accommodation and food service activities and transportation and storage sectors accelerated. Meanwhile, the wholesale and retail trade sector continuously expanded. However, manufacturing, agricultural, construction, and electricity and gas sectors declined.

- Prediction of Thailand general economic situation in the next 12 months:

60.67% of enterprises believed that Thailand’s economy would be better in the next 12 months, 37.33% said that the economy would remain unchanged, and 2.00% of businesses are worried about Thailand’s economy in the future.

According to the National Economic and Social Development Council of Thailand (NESDC), The Thai economy in 2019 expanded by 2.4 percent, compared with 4.2 percent in 2018. Export value declined by 3.2 percent and private consumption and total investment grew by 4.5 and 2.2 percent respectively. Headline inflation averaged 0.7 percent and the current account recorded a surplus of 6.8 percent of GDP.

Financial Conditions: The policy rate decreased by 25 basis points to 1.25 percent per annum in the fourth quarter of 2019. In the meeting on 6th November 2019, the Monetary Policy Committee (MPC) decided to lower the policy rate by 25 basis points from 1.50 percent per annum to 1.25 percent per annum with the decision based on the assessment that the Thai economy would expand at a lower rate than previously assessed and further below its potential. Likewise, Federal Reserve (Fed) decided to lower its policy rate by 25 basis points to a range of 1.50-1.75 percent per annum. Similarly, many central banks continued to ease their monetary policies and cut their policy interest rates from previous quarter such as the central banks of India, Australia, South-Korea and Indonesia decided to lower their policy rates by 25 basis points. In particular, the central bank of Russia cut its policy rate twice by 50 basis points in October and by 25 basis points in December. As a result, its policy rate was decreased from 7.00 percent per annum to 6.25 percent per annum.

- Plans to use employees:

In the survey: 34.00% of enterprises expected to raise human resources; 54.67% of enterprises planned to remain and 11.33% enterprises will reduce the number of employees in the future.

According to (NESDC), Employment: dropped as a result of a decline in employment of both agricultural and non-agricultural sector, while unemployment rate remained low. Employment in the fourth quarter of 2019 declined by 1.1 percent compared with a drop of 2.1 percent in the previous quarter. In details, agricultural employment dropped by 1.6 percent, which was a continuous decline for four consecutive quarters. Non-agricultural employment declined by 0.9 percent, due to the drop in employment in manufacturing sector and accommodation and food service activities sector. However, and construction sector and wholesale, retail sales, and repair of motor vehicles and motorcycles sector rebound in Q4/2019.

In 2019, the average unemployment was 3.7 thousand persons. The unemployment rate stood at 1.0 percent.

- Investment plans for fixed assets:

46.00% of surveyed businesses planned to invest more costs for fixed assets, 46.00% of these still have no plan and 8.00% planned to reduce the cost for fixed assets in the next 12 months.

- The belief in revenue growth:

71.33% of participating enterprises were confident of an increase in sales, 26.67% of businesses said that the revenue would remain and 2.00% business is concerned about the number of sales going down in the next 12 months.

- The belief in profit growth:

72.00% of enterprises believed that profit would rise in the following year, 26.00% of businesses believed that profit would remain and 2.00% business is concerned about the number of profit going down in the next 12 months.

According to (NESDC), Economic Projection for 2020 : The Thai economy in 2020 is projected to expand in the range of 1.5 - 2.5 percent (with the midpoint of 2.0 percent), compared with 2.4 percent in 2019. Headline inflation is estimated to lie within the range of 0.4 -1.4 percent and the current account is anticipated to record a surplus of 5.3 percent of GDP.

In the press release dated on February 17th, 2020, the NESDC forecasted that the Thai economy is expected to grow in the range of 1.5 - 2.5 percent (with the midpoint of 2.0 percent), revised downwardly from 2.7 - 3.7 percent (with the midpoint of 3.2 percent) in the previous projection, released on November 18th, 2019, together with the revision in key growth components to be consistent with changing conditions.

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