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» The Business Confidence Index increased 2 points In the First Quarter of 2022

29th April 2022, Siam Ratings Agency Company Limited (SRA) announced the result of the survey about WVB Business Confidence Index in the First quarter of 2022.

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 April 2022 to the late of April 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 First quarter of 2022 reached 128 points, increased by 2 points compared to the fourth quarter of 2021 (126 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 2022.

Summary of investigation results of 6 components building Business Confidence Index (BCI) in the first quarter of 2022 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, 46.00% of enterprises said that the economic conditions of Thailand remained the same. 27.33% of enterprises said that economic conditions were somewhat worse than 12 months ago.

          According to the Shareholder Newsletter from Kasikorn Research Center (KResearch), The Thai Economy and Tourism Have Begun to Make Substantial Recovery after the Relaxation of Lockdown Measures and Reopening to International Tourists

          In 4Q2021, improvements were seen in the COVID-19 situation worldwide as the number of daily infections began to decline and more people received vaccines. As a result, many countries reported a solid economic rebound such as the US. Concurrently, the economic sector was experiencing risks from higher inflation rates, caused by both the economic recovery, which in turn bolstered consumer purchasing power and demand (demand-pull inflation), and rising commodity prices, which in turn drove up manufacturing costs (cost-push inflation). Such factors prompted many countries to normalize their monetary policy stances such as the US that began their QE tapering program, and South Korea that started to raise their interest rates.

          Regarding Thailand, the economy is set to rebound after the government has begun to ease lockdown restrictions and reopen the country to international tourists. The export sector continues to perform well. The number of international tourist arrivals has increased steadily following the government’s decision to reopening to foreign visitors on November 1, 2021. During the first 25 days of reopening, Thailand welcomed more than 100,000 international tourists, compared to that seen during the implementation of the Phuket Sandbox (in early 3Q2021). During July - October 2021, the number of international tourist arrivals in Thailand reached 65,670. It is expected more foreign holidaymakers will visit Thailand during December 2021, which is the high season. Given this, the number of international visitors may increase over our prior estimate at 350,000, and this is bound to allow Thai tourism to gradually pick up, including domestic employment and household purchasing power. The export sector continues to perform well in line with the economies of Thailand’s trade partners.

- 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), Close Attention Must Be Paid to the Impact of the New Omicron Variant of COVID-19 on Thai Tourism in 1Q2022.

          The global and Thai economic outlook may experience increased uncertainty again after the emergence of the new Omicron variant of COVID-19. Currently, no clear information has been reported regarding its infection rate and efficacy of existing vaccines. However, stringent travel controls imposed by many countries may affect the Thai economic recovery outlook for 2022, particularly in 1Q2022.

          During November 26 - 27, 2021, the new Omicron variant of COVID-19 was first detected. It has an unprecedentedly large number of mutations across the entire genome of COVID-19 found so far. The World Health Organization (WHO) has classified Omicron as a “variant of concern” (VOC), but no clear information regarding its severity and vaccine efficacy is presently available. The latest data shows that this new variant could be more contagious, but related death cases or severe illness have not been reported. Nevertheless, risks that may stem from the Omicron variant must be closely monitored.

          The overall Thai economic performance during 1Q2022 will primarily rest with the impact of the Omicron variant of COVID-19. Under the base-case scenario, the Thai economy would grow up to 3.7 percent, but it may expand only 2.8 percent under the worst-case scenario.

- Plans to use employees:

          In the survey: 35.33% of enterprises expected to raise human resources; 56.67% of enterprises planned to remain and 8.00% of enterprises will reduce the number of employees in the future.

          According to The National Economic and Social Development Council of Thailand (NESDC), Employment decreased following the decline in employment in non-agricultural sector whereas employment in the agricultural sector continued to increase.

          The unemployment rate decreased from the previous quarter and was lower than the same quarter last year. In the fourth quarter of 2021, employment declined by 1.0 percent, continued from a 0.6-percent contraction in the previous quarter. Non-agricultural employment (shared 66.76 percent) continued to decrease for two consecutive quarters by 2.1 percent, mainly due to a decline in the employment in construction and accommodation and food service activities sectors. However, employment in wholesale and retail trade; repair of motor vehicles and motorcycles sector continued to grow for two consecutive quarters by 0.7 percent. On the one hand, agricultural employment (share 33.24 percent) increased for five consecutive quarters by 1.3 percent, in tandem with the increase in production of several key agricultural products such as sugarcane, oil palm and fruit, etc. The unemployment rate was at 1.64 percent, lower than 2.25 percent in the previous quarter, and also lower than the unemployment rate (1.86 percent) in the same quarter last year. The average number of unemployed was at 632,000 people, compared with 727,000 people in the same quarter last year.

- Investment plans for fixed assets:

          72.00% of surveyed businesses planned to invest more costs for fixed assets, 24.67% of these still have no plan and 3.33% planned to reduce the cost for fixed assets in the next 12 months.

- The belief in revenue growth:

          84.00% of participating enterprises were confident of an increase in sales, 15.33% of enterprises said that the revenue would remain and 0.00% business is concerned about the number of sales going down in the next 12 months.

- The belief in profit growth:

          84.00% of enterprises believed that profit would rise in the following year, 15.33% of enterprises believed that profit would remain and 0.00% business is concerned about the number of Profit going down in the next 12 months.

          According to The National Economic and Social Development Council of Thailand (NESDC), Thai Economic Outlook for 2022:

          The Thai economy in 2022 tends to recover continually from the low base in 2021, supported mainly by the domestic demand expansion. Despite the Omicron variant outbreak, it is expected that the impact of the resurgence on the healthcare system should be limited within the first quarter of 2022 and the government should be able to continue relaxing containment measures subsequently. In addition, key supporting factors include the tourism recovery due to easing of international travel restriction, and exports expansion following expansions of the world economy and trade volume. However, there are some constraints and risks which could undermine the 2022 baseline growth including the uncertainty of COVID-19 outbreaks amidst virus mutations, inflationary pressures from rising global oil and commodity prices, weak financial conditions of the households and business sectors, prolonged disruptions in global supply chain and logistics, and volatilities in the global economic and financial landscape amidst the heightened inflation pressure and geopolitical conflicts.

          The recovery of domestic demand will be supported by the continual relaxation of containment measures25 with limited impact of the Omicron variant outbreak on the national health services26, along with the progress of vaccine distribution27 and behavioral adaptation of individuals and business sector to COVID-19 restriction measures, economic activities and domestic consumption will continue to recover. Furthermore, the domestic demand will also be driven by increasing of households and businesses income bases due to expansions of exports and manufacturing sector, together with an improvement of labor market as reflected by a decline in unemployment rate from 2.3 percent in the fourth quarter of 2021 to 1.6 percent, the lowest rate since the first quarter of 2020. Additionally, the government policy has also played a crucial role to support domestic demand. Meanwhile, private investment is anticipated to grow due to the expansion of exports and the manufacturing sector, along with progresses in major infrastructure projects, especially investments under public-private partnerships, and the upward tendency of application and approval of investment promotion certificates during 2019 – 2021.

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