Thai businesses expect minimal effect from US Bank collapse

FILE PHOTO: Thai Businesses feel mostly optimistic about the economic forecast.

Thai businesses are optimistic that they will experience only minimal impact from the collapse of US banks. A recent survey by the University of the Thai Chamber of Commerce (UTCC) interviewed 600 business owners to gauge the economic damage of the US banking turmoil.

The survey found that 73.5% believe the effects of the US banking crisis will have only a marginal on their companies and the Thai economy as a whole will be marginal. However, the study also revealed that 80% of business owners believe that Thailand’s international trade is still at risk of being affected.

The UTCC survey highlighted cost as the most impacted factor, particularly in terms of inflation and production costs, which impact sales and profits. UTCC President Thanavath Phonvichai outlined the concerns of business leaders.

“Business owners believe that sales are currently not strong due to repeated misfortune. Even though the Thai economy has improved in terms of tourism and increased trade, the sluggish global economy, tepid Thai exports, existing concerns about high electricity costs, the global economic slowdown, high inflation as well as bank failures in other countries, have led to cautious spending habits among consumers.”

Most believe things will get better and better, and are eyeing the third quarter for things to really pick up, rounding out the year with a strong economic recovery expected in the fourth quarter. The survey found that investment, particularly short-term investment, is unlikely to be a significant driving force in the country’s development.

While businesses remain positive about foreign drama affecting the Thai market, there are local factors too. Business owners are adopting a cautious “wait and see” approach during the second and third quarters as they judge the winds of the political climate.

The current government was just dissolved two days ago to make way for a general election coming May 14. Unsure of the election outcome, business owners must try to predict how it could affect the economy.

Thanavath expects the forthcoming election to be fiercely contested, with the opposition party competing to take over under a “landslide” policy, while coalition parties are out to pick up the most seats in parliament. As a result, it is predicted that up to 120 billion baht will be spent on the election campaign, double the original estimate.

The UTCC survey suggests that while Thailand’s economy has improved in terms of tourism and increased trade, the election could still be a negative factor, along with global economic slowdown and bank failures in other countries.

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Neill Fronde

Neill is a journalist from the United States with 10+ years broadcasting experience and national news and magazine publications. He graduated with a degree in journalism and communications from the University of California and has been living in Thailand since 2014.