Survey finds Thai chief execs expect economic slowdown to get worse

 

 

 

 

 

The survey was conducted from September 23 to October 2 on 403 CEOs, asking them about their views on the Thai economic outlook, business performance and important factors affecting their operations in September and October.

Based on the findings, the economic index remained negative for the second consecutive month. The September index fell to minus 7, a five-point drop from August, with negative expectations continuing for October, at minus 8. 

The fall in the economic index has been driven by the slowdown in the Thai economy, declining purchasing power due to the rising cost of living, and the global economy. 

The continued drop in the index also indicates that CEOs believe the economic slowdown will be much more serious than is currently the case.

Four business-performance sentiment indexes – revenue, cost, liquidity and employment –  continued to show a pessimist outlook. 

September’s revenue index was minus 10, and a further decline to minus 11 was expressed for October. 

The cost index rises rose from 52 in August to 54 in September, with a fall to 47 expected for this month. While the October fall represents an improvement, the fact that the cost index remains in positive territory implies that costs will continue to rise, albeit at a slower pace than in August.

Pessimistic outlooks for revenue and cost indexes caused the liquidity index to fall to minus 3 in September, with an expected decline to minus 5 expressed for this month. 

Meanwhile, for the first time this year, the CEOs’ employment index was in negative territory, at minus 3 in September and minus 1 for this month.

The five most important factors affecting business performance in September-October were stated as follows: the overall condition of the Thai economy (4.5 points on a scale of 5); reduced demand (4.3 points); the global economy (4.2 points); costs of raw materials (4 points); and exchange-rate volatility (4 points).

 

Causes 

It is clear from the results of the survey that the economic slowdown and higher cost of living have caused a decline in the nation’s purchasing power. 

However, while this pessimistic trend has led to prolonged liquidity problems, the fact that the rating for access to finance fell from 3.9 points in August to 3.4 in September implies that business has been able to find a way to cope with the problem, albeit a temporary one. 

What remains to be seen is how the business sector will cope with the unwelcoming outlook for the Thai economy if such a downward trend is to be protracted.