The delay to the formation of the new government amid high levels of household debt, living costs, and interests as well as a slowdown in exports have resulted in the Thai Industries Sentiment Index (TISI) dropping to its lowest level in 10 months.
The index stood at 92.3, having declined from the prior month due to a slowdown in demand for goods and in the manufacturing sector. Domestic factors such as high levels of household debt and high living costs have weakened the purchasing power of households, resulting in diminished demand for various goods. Interest rates, meanwhile, remain in an upward direction and are pushing up the costs of borrowing. The unclear political situation was now having impacts on private sector confidence.
According to the Federation of Thai Industries (FTI), risk factors outside of Thailand include the still-fragile global economy that has now caused Thailand’s exports to slow down for 9 consecutive months. Another foreign risk factor was the lower-than-expected growth of the Chinese economy.
The FTI’s forward confidence index for the next 3 months stood at 100.2 – also a decline from the previous month’s figure. The drop was attributed to businesses being worried about delays to the formation of the new government, which may adversely affect state sector budget planning. The delay in government formation was also expected to result in a lack of continuity in implementing economic policies. The private sector was also concerned about the tendency for production costs such as those for fuel, electricity, and labor to rise. Such a rise in costs would be an obstacle to business operations amid the high uncertainty in the global economy at present.
FTI Chairman Kriengkrai Thiennukul said the private sector wanted a new government to be quickly formed and economic rehabilitation and stimulation policies to be rapidly issued. He said the private sector wanted investors’ confidence to be fostered and measures to be issued to mitigate the impacts of heightened borrowing costs. This would improve small and medium enterprises’ liquidity and reduce their risk of developing non-performing loans. (NNT)
