Business optimism in Thailand slipped back in the second quarter, weighed down by the stoppage of unauthorised fishing trawlers, a decade-worst drought, failure of aviation to meet international safety standards and the cooling economies of major trade counterparts, according to Grant Thornton's latest International Business Report.
Confidence in the Thai economic outlook declined to 10% from 36% in the previous three months.
Business leaders in Thailand cited a lack of growth initiatives as a major source of concern, according to the report, which surveyed 2,580 senior business leaders in 36 economies.
"In Thailand we are struggling to find many reasons for optimism. The government's focus is more towards stability over prosperity, but it could be argued that this focus has at least arrested severe economic turbulence in recent years and they are trying to deal with significant systemic issues that had not been tackled for many years," said Andrew McBean, a partner at Grant Thornton in Thailand.
Business confidence across the Asia-Pacific region rose for the third straight quarter. China showed the biggest improvement but recent volatility in Chinese shares would indicate this optimism will be prone to volatility.
Business optimism in emerging Asia-Pacific rose to 52% in the second quarter from 43% in the previous quarter, driven by a rise of 12 percentage points in China to 46%. Elsewhere, India (85%), the Philippines (78%) and Indonesia (60%) fell back slightly, but all remain in the global top 10.
A shortage of skilled workers remains a problem across the region. Just over a third (36%) of businesses leaders cite a lack of talent as a constraint on their growth prospects, well above the global average (29%). Businesses in India (64%) and the Philippines (44%) are particularly concerned.
"Demographics have a big part to play in the outlook for the region. China is facing an ageing population and a slowdown in the migration of workers to cities. India's population is relatively young but businesses are complaining about a lack of skills, which is a worry," the quarterly survey said.
Thailand is running at very close to zero unemployment and has a rapidly ageing population, but its immigration policies are not aligned with the need to get workers from abroad and the country can expect some real challenges in the medium term, the report said.
Rising sentiment in China should be good for the rest of the region if the markets can find stability, especially if Chinese consumers start demanding more imports as the economy rebalances.
China is also looking for other countries to invest their money and Thailand may benefit from this. India has enacted some encouraging reforms but more needs to be done in terms of job creation.