Range of issues drove down industrial confidence in first quarter
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THE THAI INDUSTRIES Sentiment Index (TISI) dropped every month in the first quarter of this year and, as of March, was sitting at its lowest point in five months because of the fragile domestic and global economic recoveries, flagging production competiti
The TISI based on a sample size of 1,160 industrial operators on average dipped from 92.7 points in December to 91.1 points in January and continued declining to 88.9 in February and 87.7 in March.
The confidence of medium to large industries in the next three months improved in March from February because government spending and investment promotions are starting to bite but the confidence of SMEs in the next three months has continued to drop because of soft domestic demand.
“Medium to large businesses are already investing for the future because they are capable and have the resources to do so.
“Their confidence has gained because they are expecting massive government spending on investment in the near future,” Supant Mongkolsuthree, chairman of the Federation of Thai Industries (FTI), which produces the TISI, said yesterday.
The confidence index for the next three months for overall industries increased from 99.2 in February to 100.4 in March, but for SMEs slipped slightly from 81.9 to 81.7. SMEs’ three months confidence was at 82.2 in January.
Suparat Sirisuwannangkura, vice chairman of the FTI, said the confidence of operators with more than half of their business coming from domestic sales has continued to decline from 92.5 points in December to 88.6 in January, 85.3 in February and 84.8 in March. This reflects softer domestic demand.
The confidence of those with more than half of their business coming from exports increased from 93.7 in December to 105.2 in January but decreased to 103.8 in February and 98.1 in March.
This reflects the poor export performance in the first quarter and diminishing demand from major trading partners such as China, Europe and Japan.
“Private investment is coming along and merchandise exports are expected to be better in the second and third quarters.
Strong baht
“The only thing that is worrisome right now is domestic consumption, which was hampered by the lowered purchasing power of farmers, who account for about 10 million of the population,” he said.
Supant has urged the Monetary Policy Committee, which will meet tomorrow, to help mitigate the strong baht situation by lowering the key interest rate by 25 basis points, since the baht has to depreciate by at least 3-5 per cent to boost Thailand’s exchange-rate competitiveness to make it even with neighbours’ currencies.
Surapong Paisitpattanapong, another FTI vice chairman and spokesman for its Automotive Industry Club, said shipments of automobiles to Europe zoomed up 71 per cent in the first quarter from the same time last year since the euro zone’s passenger car registrations have surged.
The European Automobile Manufacturers Association revealed on Sunday that demand for new passenger cars in the EU had increased for the 19th straight month.
Passenger car registrations advanced by 8.6 per cent in the first quarter and 10.6 per cent in March to 1.6 million units on year.
Thailand’s sales of eco-cars in North America were also performing well.
The Automotive Industry Club would likely revise its export production forecast upward in two months but its domestic forecast downward because of disappointing domestic demand, which contracted by about 10 per cent in the first three months.
