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» The Business Confidence Index slightly decreased 1 point In the First Quarter of 2023.

1st May 2023, Siam Ratings Agency Company Limited (SRA) announced the result of the survey about WVB Business Confidence Index in the First quarter of 2023.

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 2023 to the late of April 2023, 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 2023 reached 130 points, slightly decreased by 1 point compared to the Fourth quarter of 2022 (131 points), This index shows that companies in Thailand have a slightly negative 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.

Summary of investigation results of 6 components building Business Confidence Index (BCI) in the First quarter of 2023 as follows:

- On the general economic situation of Thailand today:

Only 44.67% of enterprises participating in the survey said that Thailand's overall economy is now better than 12 months ago, 36.00% of enterprises said that the economic conditions of Thailand remained the same. 19.33% of enterprises said that economic conditions were somewhat worse than 12 months ago.

According to the Shareholder Newsletter from Kasikorn Research Center (KResearch), The global economy exhibits signs of a steady slowdown amid persistent risks, including the implementation of aggressive monetary policies to combat inflation.
Meanwhile, China has begun to relax its COVID-19 restrictions.

Signs of a steady economic slowdown have been seen in the world’s leading economies such as the US and those in the Eurozone due to the implementation of their tight monetary policies. Although inflationary pressures in the US have begun to ease, as reflected in the inflation rate that declined substantially to 7.1 percent YoY in November 2022, from 7.7 percent YoY reported for October 2022 and 8.2 percent YoY in September 2022, the US labor market remains robust, prompting the US Federal
Reserve (Fed) to steadily raise its policy rates. The US central bank will likely slow its policy rate hikes to a meagre pace, as well. At the latest FOMC meeting, the Fed signaled the continuation of raising its policy rates to 5.1 percent by the end of 2023.

The US aggressive monetary stance has affected financial market and economic activity in the US. Several large companies in the US have begun to cut jobs in a bid to
reduce costs amid uncertainties surrounding the US economy. Meanwhile, the Eurozone is still reeling from the inflation risk. Its inflation continued to hover around 10.0 percent in November 2022, causing domestic consumption to slow down, as reflected in the Retail Sales Index that contracted substantially to 2.7 percent YoY in October 2022. Additionally, sanctions on Russia, including an oil import ban and a price cap set for Russian oil exports, effective December 5, 2022, have resulted in a tighter energy supply in the Eurozone, and this in turn may drive up inflation within the economic bloc. Meanwhile, the Chinese economy continues to weaken, as reflected in its Manufacturing Purchasing Managers’ Index (PMI) that remained below 50 in November 2022, and total retail sales that were below the previously projected figure
at -0.5 percent YoY. Moreover, the COVID-19 outbreak in China worsened in November 2022, prompting the government to reimpose lockdown measures in several areas. However, public discontent towards the government’s zero COVID-19 policy has partly prompted the government to begin easing those measures such as the cancellation of mass testing and reduction of quarantine periods. Even as Beijing has relaxed several COVID-19 restrictions, China’s reopening may take a while or probably not as early as the first half of 2023.

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

63.33.00% of enterprises believed that Thailand’s economy would be better in the next 12 months, 36.67% 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), Global leading economies are at risk of edging towards a recession while
tourism will become Thailand’s key economic driver amid sluggish global demand in 2023.

During 1Q2023, the Thai economy is projected to post steady growth, supported primarily by a substantial recovery in tourism. As of December 10, 2022, the number of international tourist arrivals in Thailand exceeded 10 million, thanks to the steady increases in the number of travelers from the Eurozone and US. Such long-haul travelers helped bolster Thailand’s tourism receipts as the amount of their spending was relatively high. We at KResearch expect that the number of international tourist arrivals in Thailand will reach 20 - 24 million in 2023, amounting to 50 - 60 percent of the total number of foreign tourist arrivals recorded before the emergence of COVID-19 in 2019, helping to support the manufacturing sector and employment in the country.
Additionally, China has begun to relax its COVID-19 restrictions. Recently, China decided to allow quarantine-free travel between China and Hong Kong during the upcoming Chinese New Year in 2023, representing a positive sign towards China’s reopening although the number of outbound Chinese tourists is expected to be limited during 1Q2023. The number of Chinese outbound tourists amounted to one-fourth
of global international tourists before the COVID-19 pandemic.

The Thai economy is set to grow at a slower rate in line with the global economy during 2023. KResearch projects that Thai exports will barely grow or even record a contraction in 2023 due to the global economic downturn. Additionally, private consumption is set to grow at a slow pace, as reflected in the Private Consumption Index that began to exhibit signs of a slowdown in 3Q2022, partly because of inflationary pressures and gradual declines in pent-up demand. Although inflation in Thailand has begun to ease, it will likely remain at an elevated level as the Producer Price Index (PPI) surged to 7.2 percent YoY in November 2022. Therefore, close attention must be paid to the cost transfer from producers to consumers and the Bank of Thailand’s policy rate hike direction. It is expected that the policy rate will be raised to 1.75 - 2.00 percent in 2023, driving up financial costs and affecting purchasing power of households. Presently, it has been seen that commercial banks have been less flexible with their retail customers.

KResearch projects that the overall Thai economy will grow within a range of 3.2 - 4.2 percent in 2023. However, growth may lean towards the lower-end of our projection band if the global economy declines faster than expected, thus hurting Thai exports.

In the survey: 46.00% of enterprises expected to raise human resources; 51.33% of enterprises planned to remain and 2.67% 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 the Social Security System:  The total number of insured persons in social security system continued to increase for the seventh consecutive quarter. The unemployment rate among insured persons under article 33 was lower than the previous quarter and the same quarter of the previous year.

The total number of social security beneficiaries continued to increase for the seventh consecutive quarter by 2.8 percent. This was mainly attributed to (i) a continued increase of compulsory insured person under article 33 by 4.5 percent, accelerating from 3.9 percent in the previous quarter. This was in line with the increase of insurers in the industrial and service sectors (such as manufacturing, accommodation and food service activities and wholesale and retail trade; repair of motor vehicles and motorcycles sector), and (ii) an increase of voluntary insured persons under article 40 by 2.0 percent, comparing with a 3.9-percent increase in the previous quarter. Meanwhile, voluntarily insured persons under article 39 continued to decrease for the fourth consecutive quarter by 3.1 percent. The unemployment rate among insured person under article 33 in the quarter was at 1.7 percent, lower than 2.0 percent in the previous quarter and 2.3 percent in the same quarter last year. The average number of unemployed was at 1.97 hundred thousand people, lower than 2.28 thousand people in the previous quarter and 2.53 hundred thousand people in the same quarter last year.

67.33% of surveyed businesses planned to invest more costs for fixed assets, 30.67% of these still have no plan and 2.00% planned to reduce the cost for fixed assets in the next 12 months.

76.67% of participating enterprises were confident of an increase in sales, 22.00% of enterprises said that the revenue would remain and 1.33% business is concerned about the number of sales going down in the next 12 months.

76.67% of enterprises believed that profit would rise in the following year, 22.00% of enterprises believed that profit would remain and 1.33% 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), The Thai Economic Outlook 2023.

The Thai economy in 2023 tends to improve continually from 2022, mainly supported by the prominent recovery of the tourism sector, especially after China's reopening, the expansion of domestic consumption and investment, notably the rebound of public investment, and the favorable condition of agricultural production. However, the economic growth could be experienced with some downside risks and limitations, including the global economic slowdown and volatility in financial market amid rising policy rates from major central banks, the uncertainty of geopolitical conflicts, weakening financial conditions of households and businesses regarding higher debt burden under upward interest rate tendency, lower support from government expenditure and the uncertain economic and political condition after the general election that may cause the Thai economy to grow lower than expected.

The recovery of the tourism sector due to a continuously increasing number of tourists. Main supporting factors are (1) the continual relaxation of international travel restrictions of both Thailand and the tourists’ origin countries, especially China’s reopening31 which will thus lead to a significant increase of Chinese tourists especially in the latter half of the year32. Moreover, tourists from other countries such as Russia, Japan, and South Korea are also expected to increase; (2) an increasing trend of international flights as observed by total number of international flights connect with Thailand in January 2023 reaching 26,402 flights, compared to only 8,376 flights in January 2022, in line with the projection of the United Nations World Tourism Organization (UNWTO) that the number of global tourists in 2023 will be approximately 1 billion persons, increasing by 71 percent compared to the previous year; and (3) government tourism promotion measures particularly under the We Travel Together Project Phase 5, implemented from March 7th, 2023 to April 30th, 2023, which will help stimulate tourism sector by inducing Thais to travel domestically, especially during the second quarter of the year.

The continued expansion of domestic consumption, due to the resumption of both economic activities and private spending after the Covid-19 situation has subsided. Meanwhile, the consumer confidence index increased to 51.7 in January 2023, the highest level in 26 months. Domestic consumption will also be supported by the recovery in the tourism sector and favorable farmer’s income. In addition, the labor market has recovered to a pre-epidemic level, reflecting from the unemployment rate in the fourth quarter of 2022 of 1.18 percent, the lowest rate in 11 quarters, compared to 1.22 percent and 0.99 percent in the same quarter of the last year and the year 2019, respectively.

A favorable condition of the agricultural sector following the expected expansion of agricultural products, supported by the favorable weather conditions and sufficient water levels. According to the data on January 31st, 2022, the amount of usable water in major dams in the area of Chao Phraya River basin (Bhumibol Dam, Sirikit Dam, Kwae Noi Bumrung Dan Dam, and Pasak Jolasid Dam) was at 29,970 million cubic metres, higher than those in the same period of last year by 10.5 percent, the highest level in 16 years, which will significantly attribute to the expansion of agricultural production in crop year 2023/2024.

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