Small and medium-sized enterprises' (SMEs) optimism about fourth-quarter income improved for the first time in several quarters, thanks to the festive season, says TMB Analytics, the research unit of TMB Bank.
Benjarong: Exports to deliver a boost
The SME confidence index for fourth-quarter income increased to 62.9 from 56.7 in the previous quarter, helping to boost the TMB SME Sentiment index for the period to 52.4 from 48.8 in the third quarter.
The quarterly index surveyed the moods of 1,225 SME operators across the country.
Improving sentiment was mainly supported by higher expected business activities such as spending and travelling season in the fourth quarter, said TMB Analytics head economist Benjarong Suwankiri. Economic momentum driven by exports and tourism in the final quarter should encourage economic expansion, he said.
Higher exports and better domestic consumption are expected to support people's purchasing power and SME income in the fourth quarter, with the trend continuing in the first quarter next year, Mr Benjarong said.
TMB Analytics forecasts 2018 GDP growth of 3.8%, rising from a 2017 projection of 3.5%. For next year, it predicts private consumption growth of 3.1-3.2%, tourism growth of 5%, export growth of 5%, private investment growth of 3.8%, and public investment growth of 7.2%.
But Mr Benjarong said it needs to continue monitoring prices of agricultural products and farm income, which could depress SME operators' income.
"Employment in the farming sector represents around 40% of total employment. If agricultural prices and farm income do not improve, it would weaken people's purchasing power and SME income," he said.
Stronger exports have aided some SMEs, particularly in the eastern and central regions.
SMEs contribute about 10% of the country's export volume, so SMEs would not benefit much from the export recovery, Mr Benjarong said.
The TMB SME Sentiment index for the third quarter fell to 37.3 from 39.6 in the second quarter, in line with economic circumstances.