Grant Thornton uses cookies to monitor the performance of this website and improve user experience
To find out more about cookies, what they are and how we use them, please see our privacy notice, which also provides information on how to delete cookies from your hard drive.
The findings, from Grant Thornton’s most recent quarterly global survey of 2,600 businesses in 37 economies, reveal that emerging and developed Asia Pacific economies are travelling in different directions when it comes to their outlook for the New Year. The optimism among developed APAC economies has fallen 8pp in Q4 2016 to net -16%, whilst emerging APAC has risen from 42% to 53%. The optimism of businesses in Thailand has dropped slightly from 18% to 16% - which represents a small drop but off a low base.
Grant Thornton International Business Report (IBR) shows that almost all sub-categories for Thailand dropped in Q4 too – selling price expectation (12% to 8%), export expectation (22% to 8%), research & development (34% to 24%) and employment expectation (28% to 12%), but investment in plant & machinery increased (16% to 24%). Perhaps unsurprisingly, the major constraints cited for Thailand’s businesses were economic uncertainty (48%), shortage of orders (42%) and energy costs (40%).
Andrew McBean, Partner at Grant Thornton in Thailand and specialist in ASEAN markets, commented, “There is a striking split in the direction of travel between business leaders in emerging and developed Asia Pacific countries. Part of the reason for this could be the likely scrapping of the Trans-Pacific Partnership (TPP), out of which developed economies – like those of Australia and New Zealand – stood to gain the most. However, China is looking to implement its own regional economic partnership, which could fill some of that gap. As we’ve seen with the ASEAN Economic Community agreed in 2015, the high levels of optimism in emerging economies reflect what can happen when closer economic ties are in place.”
“In Thailand, the IBR survey results show that the main factor contributing to the optimism drop is the volatility of the economy last year, which is still an ongoing concern. We’ve seen a lot of changes across the world such as the Brexit and the US election with new trade policies so businesses are not clear yet. These could cause the investment from the private sector to slowdown as well. So in short, the government needs to find a way to help build investment confidence among the private sector and foreign investors. There also needs to be an economic plan in place to prevent obvious risks that may result from those changes as well as risks that continue to have an affect throughout the year. Infrastructure projects tend to have a low disbursement to the general public at the beginning but more benefit once the infrastructure has been built so the benefits are more longer term.”
Findings from Grant Thornton’s IBR also reveal that across the Asia Pacific region, the outlook on a number of key indicators is strong heading into 2017. The proportion of firms expecting profitability to increase over the next 12 months has gone up to 34%, the highest in almost two years. Incentivise productivity improvements is the growth initiative APAC businesses are most likely to implement over the next 12 months, whilst developing or launching a new product or service (42%) and improving salesforce effectiveness (40%) are the growth initiatives that Thai businesses are most likely to implement.
Andrew added: “In the digital era, consumer behavior always changes. Gen Z and Millennials are particularly savvy and are very quick to access information. Businesses need to find new products or services that excite the market and help deliver exceptional experiences. With Thailand’s aging population, we will see many businesses veer towards using more automation and technology that helps to improve operation processes so that the sales force is more efficient. This will also help to carry the load left by the shrinking labour force. Outsourcing has already been accepted in many industries, allowing businesses to optimise opportunities by focusing on their core activities.”
“There will be challenges in 2017, including the impact of further rate rises from the US Federal Reserve. But this doesn’t mean that growth plans across Asia Pacific should be abandoned. Rather, they should be focused on investing for greater efficiency, hiring new skilled workers, or researching new markets and services. Dynamic firms with the ability to think long-term and pay attention to their operations will be the big winners.”
Press Release
Grant Thornton business survey finds Thailand’s optimism still low and waning slightly
23 Jan 2017
With Asia Pacific business leaders reporting a split in optimism heading into 2017
The findings, from Grant Thornton’s most recent quarterly global survey of 2,600 businesses in 37 economies, reveal that emerging and developed Asia Pacific economies are travelling in different directions when it comes to their outlook for the New Year. The optimism among developed APAC economies has fallen 8pp in Q4 2016 to net -16%, whilst emerging APAC has risen from 42% to 53%. The optimism of businesses in Thailand has dropped slightly from 18% to 16% - which represents a small drop but off a low base.
Grant Thornton International Business Report (IBR) shows that almost all sub-categories for Thailand dropped in Q4 too – selling price expectation (12% to 8%), export expectation (22% to 8%), research & development (34% to 24%) and employment expectation (28% to 12%), but investment in plant & machinery increased (16% to 24%). Perhaps unsurprisingly, the major constraints cited for Thailand’s businesses were economic uncertainty (48%), shortage of orders (42%) and energy costs (40%).
Andrew McBean, Partner at Grant Thornton in Thailand and specialist in ASEAN markets, commented, “There is a striking split in the direction of travel between business leaders in emerging and developed Asia Pacific countries. Part of the reason for this could be the likely scrapping of the Trans-Pacific Partnership (TPP), out of which developed economies – like those of Australia and New Zealand – stood to gain the most. However, China is looking to implement its own regional economic partnership, which could fill some of that gap. As we’ve seen with the ASEAN Economic Community agreed in 2015, the high levels of optimism in emerging economies reflect what can happen when closer economic ties are in place.”
“In Thailand, the IBR survey results show that the main factor contributing to the optimism drop is the volatility of the economy last year, which is still an ongoing concern. We’ve seen a lot of changes across the world such as the Brexit and the US election with new trade policies so businesses are not clear yet. These could cause the investment from the private sector to slowdown as well. So in short, the government needs to find a way to help build investment confidence among the private sector and foreign investors. There also needs to be an economic plan in place to prevent obvious risks that may result from those changes as well as risks that continue to have an affect throughout the year. Infrastructure projects tend to have a low disbursement to the general public at the beginning but more benefit once the infrastructure has been built so the benefits are more longer term.”
Findings from Grant Thornton’s IBR also reveal that across the Asia Pacific region, the outlook on a number of key indicators is strong heading into 2017. The proportion of firms expecting profitability to increase over the next 12 months has gone up to 34%, the highest in almost two years. Incentivise productivity improvements is the growth initiative APAC businesses are most likely to implement over the next 12 months, whilst developing or launching a new product or service (42%) and improving salesforce effectiveness (40%) are the growth initiatives that Thai businesses are most likely to implement.
Andrew added: “In the digital era, consumer behavior always changes. Gen Z and Millennials are particularly savvy and are very quick to access information. Businesses need to find new products or services that excite the market and help deliver exceptional experiences. With Thailand’s aging population, we will see many businesses veer towards using more automation and technology that helps to improve operation processes so that the sales force is more efficient. This will also help to carry the load left by the shrinking labour force. Outsourcing has already been accepted in many industries, allowing businesses to optimise opportunities by focusing on their core activities.”
“There will be challenges in 2017, including the impact of further rate rises from the US Federal Reserve. But this doesn’t mean that growth plans across Asia Pacific should be abandoned. Rather, they should be focused on investing for greater efficiency, hiring new skilled workers, or researching new markets and services. Dynamic firms with the ability to think long-term and pay attention to their operations will be the big winners.”