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» The Business Confidence Index slightly decreased 3 point In the Third Quarter of 2023.

1st November 2023, Siam Ratings Agency Company Limited (SRA) announced the result of the survey about WVB Business Confidence Index in the Third 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 October 2023 to the late of October 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 97% of total enterprises participating in this quarter.

According to the survey, the Business Confidence Index (BCI) in the Third quarter of 2023 reached 129 points, slightly decreased by 3 point compared to the Second quarter of 2023 (132 points), This index shows that companies in Thailand have a negative perspective on the current economic situation. However, most companies express confidence that the Thai economy will improve in the upcoming phase. Furthermore, there are several enterprise that believe the current economy is highly volatile and challenging to predict due to the fluctuations in the global economy.

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

On the general economic situation of Thailand today:
Only 42.67% of enterprises participating in the survey said that Thailand's overall economy is now better than 12 months ago, 37.33% of enterprises said that the economic conditions of Thailand remained the same. 20.00% of enterprises said that economic conditions were somewhat worse than 12 months ago.

According to the Shareholder Newsletter from Kasikorn Research Center (KResearch), Chances for the US and Eurozone to tip into a recession look slim while the Chinese economy has begun to show signs of losing its recovery momentum.

Western countries are more likely to avoid a recession this year, especially the US that recorded better-than-expected economic growth during 1H2023, and markets are increasingly looking at the possibility that the US Federal Reserve (Fed) can get inflation back to its target level without facing a recession (soft landing) after inflation has steadily cooled down. In July 2023, the US inflation rate stood at 3.2 percent YoY amid a robust US labor market and consumer spending despite the contraction seen in the Purchasing Managers’ Index (PMI). As expected, the latest Federal Open Market Committee meeting in July 2023 resolved to raise the policy rate by another 0.25  percent to 5.25 - 5.50 percent while the Fed may either hike its policy rate further or pause its interest rate hike at the next meeting. However, persistently high product prices, tighter lending criteria and lower public spending are expected to pressure the US economy going forward. Meanwhile, the Eurozone economy grew better than expected in 2Q2023 at 0.6 percent YoY because inflation there began to decline amid falling energy prices. However, as energy prices in the Eurozone are considered at elevated levels, the European Central Bank (ECB) continues to signal further interest rate hikes. Looking into the remainder of 2023, it is expected the US and Eurozone
economies will slow down due to the impacts of their interest rate increases. Nevertheless, their economies overall will continue to grow during 2023.

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

 60.00% of enterprises believed that Thailand’s economy would be better in the next 12 months, 40.00% 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), For Thailand, although tourism remains a key economic driver, additional challenges, especially from the anemic recovery in the Chinese economy, may cause the Thai economy to grow more slowly than previously estimated.

It is expected that the Thai economy will continue to grow during 2H2023 in line with the recovery in tourism. As of July 2023, the number of international tourist arrivals in Thailand reached more than 15 million. It is projected that Thai tourism will
rebound further during the remainder of 2023, especially in the final quarter, which is the high season. We at KResearch are of the view that the number of international tourist arrivals in Thailand may reach approximately 28.5 million in 2023, helping
support employment and private consumption to some extent. Meanwhile, although Thailand’s headline inflation fell sharply to near zero from May to July 2023, the persistently high commodity prices and cost of living overall, such as electricity bills,
continued to undermine consumer purchasing power in the country. Additionally, positive risks stemming from inflation remain to be seen amid uncertainty surrounding commodity prices and the transfer of producers’ prices to consumers. KResearch,
therefore, remains cautious towards domestic consumption. Moreover, Thailand’s economic recovery has been uneven as export-oriented industries are being pressured by the global economic downturn, which has resulted in weak global demand. In spite of this, Thai shipments may rebound to some extent during 2H2023, especially 4Q2023, thanks to the low base of 2022. KResearch views that the overall Thai exports in 2023 will continue to contract over-year. Shrinking shipments, therefore, will be a key factor inhibiting the Thai economy in 2023. Additionally, Thailand’s economic recovery momentum may face other challenges during the remainder of 2023. These include hefty household debt, higher lending rates, and drought that may affect agricultural production, the slowing Chinese economy and political uncertainty in Thailand, which is an issue that must be closely monitored.

In summary, the Thai economic recovery during 2H2023 will be primarily driven by tourism. As a result, the GDP growth in 2H2023 will be better than that reported for 1H2023. However, amid persistent challenges seen during 2H2023, it is expected that the Thai economy will post lower-than-expected growth of 3.7 percent in 2023.

Plans to use employees:

In the survey: 50.00% of enterprises expected to raise human resources; 42.67% of enterprises planned to remain and 7.33% 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 number of insured people in the social security system continued to increase for the ninth consecutive quarter. The unemployment rate among insured persons under article 33 increased from the previous quarter, but lower than the same quarter last year.

The total number of social security beneficiaries increased for the ninth consecutive quarter by 2.0 percent. This consisted of compulsory insurers under article 33 which increased for the seventh quarter continuously by 3.6 percent, compared to a 4.1-percent increase in the previous quarter, in line with an increase in insured persons in the manufacturing and service sectors (such as construction, accommodation and food service activities, wholesale and retail trade; repair of motor vehicles and motorcycles and manufacturing sector), and voluntarily insured persons under article 40 which increased by 1.1 percent compared with a 1.3-percent increase in the previous quarter. Nevertheless, voluntarily insured persons under article 39 continued to decline for the fourth quarter by 2.7 percent. The unemployment rate among insured person under article 33 in this quarter was 2.13 percent, higher than 1.94 per quarter in the previous quarter but lower than 2.17 percent in the same quarter last year. The average number of unemployed was 2.50 hundred thousand people, higher than 2.27 hundred thousand in the previous quarter and higher than the number of 2.45 hundred thousand people in the same quarter last year.

Investment plans for fixed assets:

68.67% of surveyed businesses planned to invest more costs for fixed assets, 28.00% 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:

76.00% of participating enterprises were confident of an increase in sales, 23.33% of enterprises said that the revenue would remain and 0.67% business is concerned about the number of sales going down in the next 12 months.

The belief in profit growth:

76.00% of enterprises believed that profit would rise in the following year, 23.33% of enterprises believed that profit would remain and 0.67% 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 the second half of 2023 is likely to improve from the first half, mainly attributable to the favorable expansion of private consumption, recovery of the tourism sector, continuous expansion of investment, and the low growth base in the fourth quarter. However, the economy still experiences limitations and important risk factors, including domestic political conditions that may affect the economic sentiment, the global economic slowdown that could hinder international trade, the financial conditions of households and business sectors which could also undermine resumption of domestic demand, and risk from climate variabilities that may affect agricultural production and thus deteriorate farmer income.

Supporting factors for the economic growth:

Favorable expansion of domestic consumption, where private consumption in the first half of the year registered a robust growth rate of 6.8 percent, accelerating from 5.3 percent in 2022 and surpassing the ten-year average of 2.9 percent, attributable to stronger consumption growth of almost all product categories, especially vehicles and services related to domestic tourism. The pronounced surge in domestic consumption finds congruence with the enhancement in employment conditions, as reflected by the continued improvement in non-farm employment, especially in the tourism-related service sector such as accommodation and food services sector, where employment significantly increased by 11.7 percent. In addition, the unemployment rate in the second quarter of 2023 remained exceptionally low at 1.1 percent, which was the same rate as in the previous quarter and was close to the pre-pandemic level of 1.0 percent in 2019. Simultaneously, the confidence sentiment was very high, as underlined by the Consumer Confidence Index in the second quarter of 2023 at 55.8, the highest level in 13 quarters. Nonetheless, the tendency of domestic demand during the rest of the year is expected to grow at a satisfactory pace, supported by the tight labor market, in line with the improvement in employment, especially in the tourism-related service. In addition, inflationary pressure is likely to decline, as seen from the inflation rate in June at 0.2 percent, which is the lowest level in 22 months, and in July, remaining as low as 0.4 percent, which can further support the expansion of domestic demand.

Low-base effect from the low economic growth during the last quarter of last year, owing to declines in exports and industrial production as a result of the slowdown in global economy and trade volume since the fourth quarter of 2022, coupled with low capacity utilization rates in many industries. It is expected that during the rest of the year, the recovery of capacity utilization, together with the continuous expansion of production and export of motor vehicles as well as the expected recovery of electronic cycles in the global market as demand continues to increase, exports and industrial production are likely to resume their expansion in the last quarter of 2023.

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