UTCC survey suggests recovery on course. Despite the global economic slowdown, the Thai economy remains on course for a recovery, according to a recent business survey. Bangkok Post

UTCC survey suggests recovery on course

Yaowarat Road in the Chinatown area of Bangkok is crowded with people looking for tasty street food after dusk. WICHAN CHAROENPAKUL

Despite the global economic slowdown, the Thai economy remains on course for a recovery, according to a recent business survey.

Thanavath Phonvichai, president of the University of the Thai Chamber of Commerce (UTCC), said most business leaders interviewed among the 850 respondents nationwide saw the global economy as being in a slowdown, not a recession, and believe that the impact on the Thai economy is insignificant. The survey was conducted by the UTCC between Sept 6-12.

"We remain bullish on foreign arrivals exceeding 10 million this year, generating more than 240 billion baht for the economy. Exports also remain strong," he said.

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Mr Thanavath said the country's economic recovery will likely be "K-shaped", with some big businesses improving while smaller companies continue to struggle.

"It is very important for the government to continue stimulating the economy in the fourth quarter," he said.

Mr Thanavath said there are five key risk factors this year: a higher rate of inflation; interest rate increases; a depreciated baht, which would make the cost of imports higher; the daily minimum wage hike; and damage arising from the ongoing floods.

He said the economy is expected to start a clearer and stronger recovery in the fourth quarter this year, driven largely by growing exports and rebounding tourism.

"Export expansion, a tourism recovery and increases in the domestic daily minimum wage are expected to help propel the country's economic growth by 3.5-4% in the fourth quarter," said Mr Thanavath.

The university expects the economy to grow 3.0-3.5% this year, with an inflation rate of 6-6.5% and export growth of 6-8%.

He said key issues the business sector is concerned about are the rising cost of living and higher production costs for manufacturers that may affect their profits and sales, while reducing customer spending.

Rising interest rates would also affect the costs and liquidity of the business sector, while the hike in the daily minimum wage in early October will affect small businesses, notably in the agricultural sector, said Mr Thanavath.

According to the UTCC's estimates -- based on 10 million workers eligible for the wage hike and an average income increase of 450 baht per month per worker -- there will be about 4.5 billion baht injected into the economy.

He said the ongoing floods are expected to cause about 5-10 billion baht worth of economic damage.

However, the impact has not yet affected the country's industrial and agricultural sectors, said Mr Thanavath.

The UTCC expects the flood damage to be offset by higher income from the arrival of foreign tourists in the fourth quarter.

The university projects 1.5 to 2 million tourists to enter Thailand in each month of the final quarter.

Last year there were only 428,000 foreign arrivals to Thailand, while in 2019, before the pandemic, the tally stood at nearly 40 million.