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Industrial confidence rebounds, but growth projection under 3%

Industrial confidence index in Thailand for the month of March rebounded to 86.7 points compared to February’s index of 85.1.

Boris Sullivan

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Industrial confidence index for the month of March rebounded to 86.7 points compared to February’s index of 85.1 due mainly to overall increase in purchasing orders, sale and production.

The rebound after two successive months of decline in confidence index was the result of an opinion poll from 1,202 industrial entities covering 45 industrial clusters of the Federation of Thai Industries.

Private sector’s investment for the whole year is expected to contract from 3.9 to 1.9 percent reflecting investors’ lack of confidence in economic performance and their wait-and-see position vis-à-vis the next election.

The factors contributing to the rebound in industrial confidence index include stimulus measure in the real estate sector and government investment in infrastructure projects which have positive impacts on industries related to construction materials generating increase in purchasing orders and sale.

Sale promotion activities for automotive industry, furniture, gem and decorations industries have also contributed to increase in purchasing orders and sale.

FTI chairman Jane Namchaisiri, however, said that the March index is still below 100 points benchmark reflecting the fact that many industrialists are still not confident with the economic situation.

He predicted that index for the next three months is expected to remain at 98.3 points reflecting the industrialists’ concern in the state of the economy.

The CIMB Thai Bank has adjusted down Thailand’s growth rate projection for this year to 3.3 percent and next year to 2.7 percent.

CIMB Thai senior director for research Mr Amornthep Jawala said that the downgrading of Thailand’s GDP for this year and next means that the country will experience below 3 percent growth rate for five consecutive years since 2013 hence putting Thailand into economic trap with structural problem which needs to be fixed.

He attributed to the declining growth projection to 4 percent contraction of exports which account for 60 percent of the GDP as a result of global economic slowdown with China focusing more on service sector rather than on imports.

He pointed out that low oil prices expected to average 35 US dollars per barrel throughout the year have affected the prices of farm products and commodities.

On imports, Mr Amornthep said imports are expected to contract by 8.2 percent reflecting the fact that there is no increase in production as import of capital goods and raw materials for production has stagnated.

Private sector’s investment for the whole year is expected to contract from 3.9 to 1.9 percent reflecting investors’ lack of confidence in economic performance and their wait-and-see position vis-à-vis the next election.

Source: Industrial confidence index rebounds in March but investors still worried – Thai PBS English News

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