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InfoQuest

FTI: TISI drops from 93.5 in July to 92.8 in August, the lowest in 10 months

September 18, 2019


Abstract : Mr. Suphan Mongkolsuthree, chairman of the Federation of Thai Industries (FTI), revealed that in August, the Thai Industries Sentiment Index (TISI) stood at 92.8, lower than 93.5 in July 2019, the lowest over the 10 months since November 2018.

InfoQuest (Sept. 17, 2019) -- Mr. Suphan Mongkolsuthree, chairman of the Federation of Thai Industries (FTI), revealed that in August, the Thai Industries Sentiment Index (TISI) stood at 92.8, lower than 93.5 in July 2019, the lowest over the 10 months since November 2018. Total orders, sales, production, and operating costs, and overall performance, all declined.

The main reason was that entrepreneurs were worried over the declining purchasing power of almost all regions in Thailand. Other factors included: prudent expenditure of consumers, fierce competition among enterprises, weaker export caused by a stronger baht than currencies of neighboring countries, and the tolls of rainstorm in many regions in late this month on transportation, particularly the north and northeast.

There were also external risks such as global economic fluctuations and the protracted trade war between China and US. Currently, a new round of trade war featuring higher tariff on both sides is happening between China and US. Though China exempted 16 kinds of American goods, it is still difficult to build up the confidence of private sector.

The TISI is expected to rise to 102.9 in the next three months from 102.3 in July 2019. Entrepreneurs predicted higher consumer spending in the last quarter of 2019. It is expected that enterprises will launch more promotion activities and release new products; enterprise sales and purchasing order will be boosted by government policies designed to stimulate domestic consumption and investment.

A survey on factors affecting business operation in August found that entrepreneurs mainly worried over the following factors: 71.6 percent of them showed concerns over global economy; 56.7 percent worried over exchange rate (from the perspective of export). In August 2019, the average exchange rate of baht against dollar was 30.94 baht/U.S. dollar, slightly higher that the average exchange rate in July, 2019, namely 30.96 baht/dollar.

Two oilfields in Saudi Arabia were attacked, reducing daily oil output by 5.7 million barrels, which accounts for over 60 percent of Saudi Arabia's total oil output and 5 percent of global oil output (currently the daily oil output in Saudi Arabia is 9.8 million barrels). That will not affect Thailand in a big way. That is because Thailand imports crude oil from many Middle East countries, rather than Saudi Arabia exclusively. Yet, Thailand should follow closely the developments of relevant issues.

FTI has proposed suggestions to the government: releasing middle and long-term (1-2 years) stimulus measures, such as making investments in agricultural water management project and dividing crop growing area. In the long run, these measures will add to the income of agricultural sector; offering support to products of emerging industries, such as sports products and health maintenance products for old people, so as to enhance the visibility of Thai products both at home and abroad.

Source: InfoQuest, by Tanawat Suayaem / Nisarat / Sasithorn, translated by Xinhua Silk Road

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Keyword: Thai-industries-sentiment-index

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