Business confidence rises in July

Business confidence rises in July

Firms still wary of economic prospects

Business sentiment rose for the second straight month in July, driven by the relaxation of the government's coronavirus lockdown measures.

Concerns remain rampant, particularly about a second wave of the virus and growing political discord.

The University of the Thai Chamber of Commerce (UTCC) said yesterday that business confidence edged up to 31.8 in July from 31.5 in June, which was the first increase in 14 months. This followed readings of 31.3 in May, 32.1 in April, 37.5 in March, 44.9 in February and 45.4 in January.

The May figure was a 29-month low dating to January 2018.

"Higher business sentiment stemmed largely from the easing of the coronavirus spread in the country and the relaxation of rigid lockdown measures," said Thanavath Phonvichai, the UTCC's president. "But the overall economic prospects remain a major concern, with the latest report from the National Economic and Social Development Council (NESDC) showing no recovery signs."

Mr Thanavath said the majority of businesses surveyed believe that overall prospects are still in bad shape, be it for the economic outlook, employment, trading or investment.

The political situation is an additional concern, particularly for foreign investors, he said.

But as long as the political rallies remain peaceful, they are likely benign, Mr Thanavath said.

On Monday, the NESDC reported that the country's GDP shrank 12.2% year-on-year in the second quarter, the biggest contraction since the Asian financial crisis of 1997-98.

The contraction was much deeper than the 2% decline of the previous quarter, attributed largely to weakness in export of goods and services, investment and private consumption.

After seasonal adjustments, the economy shrank 9.7% from the first quarter. For the first half of 2020, the economy contracted 6.9%.

The readings prompted the government's planning unit to cut its economic outlook for the full year to a 7.3-7.8% contraction from an earlier forecast of a 5-6% contraction.

The NESDC said the revision was mainly because of sharp declines in the number of foreign tourists and the revenue generated by them; the severe global economic recession and subsequent drop in merchandise trade; the impact of the pandemic; and drought conditions.

Mr Thanavath said the business sector also repeated its call for the government to help rev up stimulating the economy and providing soft loans to small and medium-sized enterprises as soon as possible.

The government is also being advised to hasten promoting domestic spending, particularly for tourism.

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