Confidence index at 26-month low as recovery slips away
Business confidence fell to a 26-month low in February as the outbreak sapped sentiment from any economic recovery and sparked concerns about the impact on people's daily lives.
The Thai Chamber of Commerce confidence index, a gauge of nationwide business sentiment, dropped from 29.8 in January to 29.6 in February -- the lowest level since January 2019, according to a University of the Thai Chamber of Commerce (UTCC) news briefing yesterday.
Sauwanee Thairungroj, an adviser to the UTCC council, said negative factors include concerns about lockdown measures imposed in high-risk areas, economic woes, political uncertainty, the trade deficit, rising oil prices and the stronger baht.
The country's GDP contracted 6.1% last year, the worst annual performance in 22 years since the Asian financial crisis, she said.
According to Ms Sauwanee, all regions in the country saw business confidence dip, with operators worried about lower income.
"Businesspeople are worried about when the country can reopen to foreign tourists," she said.
"They also want the government to speed up the economic stimulus package roll-out to boost spending and alleviate hardships in the business sector, particularly tourism."
The government should avoid imposing restrictions on people moving between provinces as that would hinder spending, particularly for long vacations, Ms Sauwanee said.
UTCC president Thanavath Phonvichai said the unemployment situation is still concerning, although many agricultural product prices are climbing, including tapioca, oil palm, maize and rubber.
Unemployment in the tourism sector is particularly bad, he said.
Mr Thanavath said with Songkran activities (namely throwing water) banned this year following a fresh outbreak, there is a distinct possibility of a 30-billion-baht decline from spending during that holiday period, which usually averages 140 billion baht.
A decline of 30 billion baht in spending is estimated to lower GDP by 0.1-0.2 percentage points this year, he said.
The government delay in pushing for economic stimulus packages and vaccine distribution could also take a toll on spending, said Mr Thanavath.
"Predicting GDP growth is difficult at this point as it depends on when the country reopens to foreign tourists and how well the outbreak is contained," he said.
The UTCC maintained its forecast of 2.8% GDP growth this year, said Mr Thanavath.
He pointed to various economic risk factors, such as drought, political uncertainly, the stronger baht, controlling outbreaks and vaccine distribution.
The IMF recently forecast Thai GDP would grow 2.6% this year, while the government expects 4% growth driven by the vaccine roll-out and economic stimulus packages.
The government needs to ensure stimulus packages help push up GDP growth by 1-2 percentage points in the second quarter, leading to zero growth in the first half this year, said Mr Thanavath.
Efforts to reach 8% growth in the second half must be scaled up, he said, for annual GDP growth to reach 4% this year.
Vaccine passports are one method to help boost tourism, said Mr Thanavath.
"The government should gear up for an economic stimulus package roll-out and reopen the country in the fourth quarter to drive GDP growth," he said.
"Whether GDP will rise depends on the volume of foreign tourists."