TISI increased for 3 consecutive months, signified the recovery in the manufacturing. Government is urged to continue measures to support business till the year-end and expedite government spending to stimulate the local economy.
Chairman of the Federation of Thai Industries (Mr.Supant Mongkolsuthree) revealed the survey of Thailand Industrial Sentiment Index (TISI) of July 2020 that the index has increased to 82.5, from 80.0 in June 2020, a continuation of growth for three consecutive months. It was found that the recovery of the manufacturing sector continues to improve. Government’s measures for easing the lock-down have allowed the business to reopen thus increasing demands for industrial products, particularly electrical appliances and electronics. clothes and construction materials. At the same time, many businesses have organized promotional activities to stimulate domestic spendings, such as motor shows and mid-year sales.
Although the TISI continued to rise, the index remains below the 100 and continue to be lower than the figure before the COVID-19 outbreak. Also, the business remains concerned on liquidity, access to finance, the recovery of the export sector, as well as the risk of a second round of the COVID-19 outbreak which may affect the industrial operations.
According to a survey of 1,211 operators covering 45 industry groups nationwide in July 2020, causes for concern were domestic political situation (51.8%), fuel prices (38%) and lending interest (22.0%). Factors boosting industrial confidence include the world economy (67.9%) and the exchange rate (Baht/ USD) in view of exporters (44.3%).
Index for the next 3-month is forecasted at 93.0, an increase from 90.1 in June 2020, contributed by the improving confidence in all components. Businesses perceive that the manufacturing sector has started showing signs of improvements shall there be second wave of the COVID-19 outbreak. Meanwhile, the index will remain below the 100, reflecting that the future confidence still below normal level due to concerns on the domestic and global economic issues, particularly the tension between the US and China.
FTI recommends that the government:
- Prolong the enterprise relief measures till end-2020, such as debt moratorium, reduction of social security payments. This would help enhance business liquidity; and
- Expedite government’s spending, especially in the government projects to stimulate the domestic economy.