Standard Chartered Bank: Businesses and Investors Expect Government to Step up Fiscal Spending to Boost Economy

Stocks and Financial Services Press Releases Friday October 11, 2019 17:37
Bangkok--11 Oct--Standard Chartered Ban
Businesses and investors expect the Thai government to increase the fiscal spending to boost the local economy, according to Standard Chartered Bank's recent local business and investor survey.

Dimmed by external factors and a lack of fresh domestic drivers, large Thai businesses, multinational companies and local asset managers reflected poor sentiment toward their business outlook over the next six months, the survey revealed.

"Respondents of our survey showed that their biggest concern is a further escalation of the US-China trade war; 50% of respondents have seen a negative impact from the dispute, while 30% think they will be affected soon," said Tim Leelahaphan, Economist, Standard Chartered Bank (Thai).

"A trade war resolution, if reached, would significantly boost the global economy in the next couple of years, according to the survey respondents. If not, they do not see any positive factors or measures that can effectively push world growth higher. This may also mean that economic policies, especially monetary policy, are viewed as becoming less effective at this juncture. In fact, the reduced effectiveness of central banks' policies is a major concern for investors."

Despite views that monetary policy will likely play a smaller role in supporting the economy, almost 80% of respondents still see the Bank of Thailand (BoT) cutting policy rates further in this cycle.

Both businesses and investors also expect the government to step up fiscal spending to boost the economy. However, they remain conservative given the uncertain political environment. For the upcoming FY20 budget, we monitor on the budget deliberation process closely.

On the FX front, respondents have been surprised by the strength of the Thai baht (THB) as fundamentals have weakened and do not justify such a strong currency. Of the respondents, 60% say the currency's strength has adversely affected business, as managing FX risk is becoming more difficult while some also continue to lose export market share. Cheaper imports have improved margins for some.

Standard Chartered Bank now has a bearish short-term bias towards the economy. While we still think 3% growth is achievable this year, this is partly due to the expected boost to H2 growth from a low base. Growth has been grinding lower on both the external and domestic fronts and signs of a turnaround are not yet clear. The Bank expects the Thai central bank to cut its policy rate by 25 basis point before the end of this year, bringing the policy rate to 1.25%.

"We think THB overvaluation should result in a correction, with the THB weakening in line with the softening economy later this year. We expect the USD-THB to move gradually higher towards 31.00, by end-2019," concluded Tim.

Latest Press Release

Leveraging synergy with MUFG, Krungsri holds seminar to provide insight into global markets, building immunity for business customers

Krungsri (Bank of Ayudhya PCL) exclusively organized an online seminar entitled “Building Business Immunity From Covid-19” for Krungsri Business customers from large corporate companies, financial institutions, and Japanese corporate and...

MOAC collaborates with the private sector to form 3,000 Smart Farming Hedge Funds for farmers

“Agriculture in Thailand is one of the main drives of economic development of Thailand also grassroots of food for the security of the country and to the world. As the majority of Thais in the agricultural industry, MOAC has the policy to create a...

Innotech Asset Management to launch a new Thai ESG equity fund IPO

Innotech Asset Management has today announced the launch of a new sustainable Thai equity fund, and has selected Arabesque Asset Management, a global asset management firm, as its portfolio investment advisor. The 'Innotech Sustainable Thai Equity...

Boxing Champion Manny Pacquiao's PAC Token Set to List on Licensed Virtual Currency Exchange in the Philippines

Global Crypto Offering Exchange (GCOX) today announced the signing of a strategic partnership with COEXSTAR Exchange, a BSP-licensed Virtual Currency Exchange in the Philippines. With the collaboration in place, PAC Token (PAC) - the digital currency of...

Despite Global Pandemic and Recession - 4ARTechnologies is the First Start-up to Fulfil Its ICO Promises With Innovative Product Release and Exchange Listing

Following the implementation of Apple recommendations, the Swiss company 4ARTechnologies launches the next version of the 4ARTapp, the art innovation that already has customers in over 60 countries, and has now successfully placed its cryptocurrency...

Related Topics