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» The Business Confidence Index increased 2 points In the Fourth Quarter of 2021

31st January 2022, Siam Ratings Agency Company Limited (SRA) announced the result of the survey about WVB Business Confidence Index in the fourth quarter of 2021.

SRA 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 early of January 2022 to the late of January 2022, 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 medium enterprises accounted for over 96% of total enterprises participating in this quarter.

According to the survey, the Business Confidence Index (BCI) in the fourth quarter of 2021 reached 126 points, increased by 2 points compared to the third quarter of 2021 (124 points), This index shows that companies in Thailand have a positive perspective on the current economic situation, which most companies also say they are still confident that the Thai economy will improve in the next phase. Besides, there are also many enterprises that believe the current economy has many fluctuations and it is difficult to predict due to the volatility of the global economy and especially the Covid-19 situation variable in 2021.

Summary of investigation results of 6 components building Business Confidence Index (BCI) in the fourth quarter of 2021 as follows:

- On the general economic situation of Thailand today:
Only 26.67% of enterprises participating in the survey said that Thailand's overall economy is now better than 12 months ago, 43.33% of enterprises said that the economic conditions of Thailand remained the same. 30.00% of enterprises said that economic conditions were somewhat worse than 12 months ago.

According to the Shareholder Newsletter from Kasikorn Research Center (KResearch), Thai Economy Already Bottomed out in 3Q2021.

Although COVID-19 keeps battering the world, the situation has begun to improve due to the rapid rise in vaccination rates seen in many countries. As a result, their economies have resumed growth, allowing them to alter their monetary policy stances.

Regarding Thailand, the COVID-19 situation already passed its worst in August 2021. Currently, the number of infections has declined to roughly 10,000, providing greater hospital bed capacity within the Thai public health system while the vaccination rate in the country is also improving. As of October 17, 2021, the first dose vaccination rate in Thailand amounted to 56.6 percent of the total population and the second dose vaccination rate amounted to 39.0 percent of the total population.

If COVID-19 vaccines are imported as scheduled (179 million doses by 2021), it is expected that the government will be able to meet its vaccination target of 70.0 percent of the total population during the remainder of 2021. Due to positive signs seen in the COVID-19 situation, the government has begun to relax some lockdown restrictions for several businesses such as allowing shopping malls and restaurants to resume their services in early September 2021. The move has helped shore up the economic activity somewhat after private consumption reported a sharp contraction of -9.2 percent YoY in August 2021. Meanwhile, the Phuket Sandbox presents an important milestone for the country’s plans to reopen to international visitors although it has not attracted as many foreign tourists as previously anticipated. Nevertheless, we at KResearch are of the view that the COVID-19 pandemic in Thailand and the Thai economy already bottomed out in 3Q2021.

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

 75.33% of enterprises believed that Thailand’s economy would be better in the next 12 months, 24.67% said that the economy would remain unchanged, and 0.00% of businesses are worried about Thailand’s economy in the future.

According to the Shareholder Newsletter from Kasikorn Research Center (KResearch), Reopening the Country Will Support the Thai Economy during 4Q2021, but There are Risks from Flooding and High Energy Costs.

The Thai government is scheduled to reopen the country to international tourists with no quarantine requirement (per vaccination conditions) on November 1, 2021, following the implementation of the Phuket Sandbox in early 3Q2021, and the relaxation of some lockdown restrictions on October 16, 2021. Such factors will likely support economic activity to resume growth during 4Q2021, thus benefiting domestic employment. KResearch is of the view that the reopening to international tourists will help bolster the number of foreign visitors in Thailand by 64.0 percent to 180,000, from our prior estimate of 150,000 during the final two months of 2021 compared to a case of no such measure at all. Additionally, if various situations improve, such a measure may allow Thai tourism to gradually recover during 2022. The government’s tourism stimulus measures such as the “Tour Tiew Thai” and “We Travel Together” programs will further boost domestic travel, as well.

- Plans to use employees:

In the survey: 28.00% of enterprises expected to raise human resources; 63.33% of enterprises planned to remain and 8.67% of enterprises will reduce the number of employees in the future.

According to The National Economic and Social Development Council of Thailand (NESDC), Labor in social security system: the total number of insured persons in social security system continued to increase for two consecutive quarters. The unemployment rate among insured persons under article 33 was lower than the previous quarter and also less than the same period last year.

In the third quarter of 2021, the total number of social security beneficiaries increased by 43.9 percent, recording the second consecutive quarter. In details, the number of voluntarily insured persons under article 40 grew by 204.0 percent, and voluntarily insured persons under article 39 increased by 11.9 percent. The expansion was partly caused by aid measures targeting registered self-employed people under article 39 (former company employees under article 33 of social security system) and under article 40 (person who was never participated in social security system under article 33) by supporting a compensation 5,000 Baht each. However, the number of compulsory insured person under article 33 fell by 0.5 percent, improving from a 1.7-percent decrease in the previous quarter, indicated that the situation of terminating workers or layoffs by employers partially continued to exist. This improvement was partly owing to the fact that insured persons under article 33 received unemployment compensation up to 50 percent of the daily wages, and obtained additional benefits of 2,500 Baht, but in total, the package would not exceed 10,000 Baht per person. Moreover, firms received a subsidy of 3,000 baht per an employed worker, maximum of 200 employees. As a result, the unemployment rate among insured person under article 33 stood at 2.5 percent in this quarter, lower than 2.8 percent in the previous quarter, and also less than 4.4 percent in the same period last year. The average number of unemployed was at 2.73 hundred thousand people compared with 4.88 hundred thousand people in the same quarter last year.

- Investment plans for fixed assets:

          65.33% of surveyed businesses planned to invest more costs for fixed assets, 32.00% of these still have no plan and 2.67% planned to reduce the cost for fixed assets in the next 12 months.

- The belief in revenue growth:

          84.31% of participating enterprises were confident of an increase in sales, 13.73% of enterprises said that the revenue would remain and 1.96% business is concerned about the number of sales going down in the next 12 months.

- The belief in profit growth:

          84.31% of enterprises believed that profit would rise in the following year, 13.73% of enterprises believed that profit would remain and 1.96% business is concerned about the number of Profit going down in the next 12 months.

According to (NESDC), Thai Economic Outlook for 2022: The Thai economy in 2022 tends to grow more-pronouncedly from the low base in 2021, supported mainly by the domestic demand resumption after improved outbreak situation and progress in vaccine distribution. In addition, the key supporting factors include the tourism recovery due to easing of international travel restriction, and exports and manufacturing expansion following the world economy and trade recovery. Moreover, the economy will be driven by government spending from both the annual budget and the loan decrees. However, key risks and limitations which could undermine the baseline growth consist of: (i) the uncertainty of COVID-19 outbreaks amidst virus mutations; (ii) weak financial conditions of the households and business sectors; (iii) possibility of prolonged disruptions in global supply chain and logistics undermining exports and manufacturing; and (iv) volatilities in the global economic and financial landscape amidst the heightened inflation pressure.

The uncertainty of the COVID-19 pandemic amid the viral mutations, which appears to be easily transmissible and possibly reduce the effectiveness of vaccines to preventing the infection, which could be the risk of the new outbreak and could thus lead to the reintroduction of stringent control measures and also restrict the international travel, particularly in the major tourist origin countries for Thailand. In addition, the delay of vaccine distributions, especially in developing countries and low-income countries would discourage tourism confidence and considerably slow down the recoveries of domestic demand and the whole economy. Moreover, the domestic pandemic situation in Thailand remains highly uncertain due to the risk of the virus mutation which are needed to be closely monitored, especially after the relaxations of containment measures and tourism reopening. At the same time, the vaccine, medicines, medical supplies, and other healthcare equipment have to be well prepared and effectively distributed in order to cope with any unexpected pandemic which could thus control the number of severe disease or death rate to remain under the public health capacity.

The unusually low growth base of the economy in 2020 and 2021 due to the COVID-19 outbreak. In fact, the Thai economy in 2020 decreased by 6.1 percent which was the first recession in 11 years, before rebounding by 1.2 percent in 2021. The domestic demand rebound, however, has been restricted by the COVID-19 resurgence. Given such conditions, the Thai economy in 2022 should regain its growth momentum from domestic demand and goods exports recovery.

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