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Thai Business Confidence at 3-Month Low as Baht Strengthens Against US Dollar

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BANGKOK – Thailand’s Chamber of Commerce has reported that business confidence in Thailand dropped in January to the lowest level in three months because of low purchasing power and farm product prices, while exports suffered from the US-China trade war.

The Thai Chamber of Commerce (TCC) confidence index, which gauges nationwide business sentiment, dipped to 48 points from 48.4 in December, 48.3 points in November and 48 in October.

The TCC index sampled 331 TCC members nationwide from every region, covering the agriculture, industrial, trade and service sectors.

“Thailand’s overall business sentiment in January decreased from myriad negative factors such as concerns about the economy, the PM2.5 dust situation, the high cost of living, a downturn in private investment flows, a drop in exports and the baht strengthening against the US dollar,” said Sauwanee Thairungroj, president of the University of the Thai Chamber of Commerce (UTCC).

Ms Sauwanee said positive factors include the upcoming general election, a recovery in Chinese tourist arrivals, government spending on mega-projects and a pickup in the consumer confidence index over the past five months.

In January the TCC index declined in the central, eastern, northern and southern regions because of low farm product prices and sluggish border trade.

In the southern region, the index hit the lowest level in 13 months because of sluggish rubber and oil palm prices.

The index in Bangkok and the northeast region was stable because of better tourism sentiment.

Wirote Jirattigalachote, chairman of the TCC’s committee on economic development in the northern region, said the index is downbeat on the regional economic outlook from low purchasing power and consumption.

While the tourism and service sectors in the northern region are still competitive because of Chinese tourists, the trade war is slowing the Chinese economy and affecting Thailand’s border trade volume, said Mr Wirote.

Thanavath Phonvichai, vice-president for research of the UTCC, said the economy faces numerous risks, so the February index is an important reflection of whether the first quarter will see a recovery.

The university forecasts GDP growth will stand at 3.5-3.8% in the first quarter, he said.

“A stronger baht means tourists will spend less, but farmers are hurting because the appreciation has been cutting into crop exports,” said Mr Thanavath.

He said the biggest concern for business operators is low purchasing power in the provinces.

“The government should oversee the agricultural sector and crop prices because increases in raw material prices will raise income and increase purchasing power,” said Mr Thanavath.

He said the daily minimum wage should increase in line with the inflation rate and a proposal to increase the wage by 2-10 baht per day is a 3% rise from 330 baht, considered an acceptable increase.