The private sector is concerned. The Monetary Policy Committee keeps interest rates and confidence index declining

FTI reveals private sector concern The Monetary Policy Committee maintains interest rates and is concerned that business will have to bear increasing financial costs. Calling on the government to issue low-interest loan measures for SMEs, the Bank of Thailand reveals that the January 2024 business confidence index fell after orders fell significantly, suggesting that the trend will remain stable over the next three months. Consider a wholesale food and beverage production cluster for recovery.

On Thursday, Mr. Montri Mahabroekvong, Vice President of the Federation of Thai Industries (FTI), revealed the results of the 37th FTI CEO Survey in January 2024 titled “High Interest Rates, Rising Debt, Industry Moves Forward. How?” It was found that FTI executives were very concerned about the Monetary Policy Committee (MPC) policy of keeping the interest rate at 2.5% for an extended period of time. It must be understood that in the past the Bank of Thailand (BoT) tried hard to create balance in managing the country's monetary policy. Whether in the economic dimension or in enhancing the stability of the value of the baht.

“However, rising interest rates are having a major impact on SME entrepreneurs. This is the group that has the largest proportion of entrepreneurs in the country and is in the process of recovering from the impact of Coronavirus (COVID-19). The need for businesses to quickly adjust to deal with The problem of production costs that have increased in almost every product over the past year.

Mr. Montrey said on the issue of the difference between loan interest rates and deposit interest rates or commercial bank spreads. Which are too far apart is the top priority of ASEAN countries causing Thai businessmen to incur increased financial costs leading to delay in business expansion or new investment. Increases the risk of financial shortages and debt default. In addition to affecting people's purchasing power, most FTI executives suggested that the Bank of Thailand consider issuing measures to supervise and inspect financial institutions when setting interest rates for both deposits and loans. Including advertising the appropriate interest rate spread (Spread) to help reduce financial costs for entrepreneurs.

In addition, most FTI executives believe that the system-wide debt resolution measures currently implemented by the government are appropriate and will help resolve the debt problem of people in the agriculture and business sectors that has long accumulated at a moderate level. In the industrial sector, it is proposed that the government issue low-interest loan measures for owners of small and medium enterprises. Through a government financial institution, developing capabilities in the production process and enhancing financial liquidity. It should also help consider reducing the conditions for obtaining credit to make it more convenient.

On the same day, the Bank of Thailand (BoT) revealed that its overall business confidence index for January 2024 stood at 48.0, down from 49.1 in December 2023, after a decline in almost every component. Especially in terms of costs relative to the non-manufacturing confidence index, they decreased in almost every business category, especially in the trading group, where confidence in orders decreased significantly. After rushing to the end of the year festival

While confidence in the manufacturing sector stabilized below the 50 level, which reflects the deterioration of confidence compared to the previous month. Confidence in the electronics group declined significantly. Especially in terms of costs, due to the high shipping costs due to the conflict situation in the Red Sea region. As for the steel production group, confidence improved mainly on the orders side. This is in line with the confidence of the electrical appliance manufacturing group that has improved in every component. This is partly due to the results of Easy E-Receipt measures that helped stimulate sales at the beginning of the year, and the overall index has remained close to the 50 level continuously since 2022 due to the confidence of both manufacturing and non-manufacturing industries. Sectors.manufacture

In the next three months, the general confidence index stabilized at 53.9 in both the industrial and non-manufacturing sectors. The food and beverage production group's confidence improved mainly from investment. In the wholesale trade group there is an improvement in confidence from the orders side. And operating results are important

In this regard, the confidence index for chemical, petroleum, rubber and plastic production groups decreased significantly in line with the upward trend of oil prices. As for the automobile production group, confidence decreased after caution in lending by financial institutions. Additionally, there are concerns about electric vehicles coming to take more market share. In addition, in the Logistics and Real Estate groups, the index decreased in almost every component.

However, the overall confidence index is likely to decline slightly since the beginning of 2023, but the index remains consistently above the 50 level.