Business sentiment fell to the lowest rate in 19 months in August, attributed to consumers’ low purchasing power, lack of financial liquidity and the trade row between the US and China.
Other negative factors weighing on sentiment included the baht's fluctuation and relatively low agricultural prices.
The Thai Chamber of Commerce (TCC) confidence index, a gauge of nationwide business sentiment, fell for a sixth straight month in August to 46.5 from 46.7 points in July, 47.1 in June, 47.4 in May, 47.8 in April, 48.4 in March and 48.5 in February.
The TCC index sampled 369 chamber members nationwide, spanning agriculture, industrial, trade and service sectors during Aug 26-30.
Thanavath Phonvichai, vice-president for research at the University of the Thai Chamber of Commerce (UTCC), said overall business sentiment in all regions remained sapped in August, but he believes sentiment will start recovering in the remaining months of the year, boosted by the government’s economic stimulus package and farmers’ income guarantee programme.
“The overall business sector believes the economy has passed the lowest point in the second quarter, when GDP growth was reported at 2.3%, the lowest in the five years,” he said. “The farmers’ income guarantee project scheme the highlighting scheme which will indicate the Thai economy recovery because the farmers’ higher income from rice, rubber, oil palm, tapioca, and maize will help boost the spending power of farmers.”
Sauwanee Thairungroj, president of the UTCC, said the business sector urged the government speed up implementing economic stimulus packages, introducing measures to prepare for natural disasters, and upgrading the quality and competitiveness of agricultural products.
The government is also being encouraged to provide soft loans to businesses to increase their financial liquidity and technology development.
Ms Sauwanee said the trade dispute and escalating political conflict between important trade partners India and Pakistan as well as South Korea and Japan, in addition to the long protest in Hong Kong, will remain key factors affecting business sentiment in the remaining months this year.