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Business Confidence in Thailand Declines Slightly Amid High Living Costs

The Bank of Thailand (BOT) has reported a marginal decrease in the Business Confidence Index for August, standing at 48.9 compared to 49.3 in the previous month. This decline is primarily attributed to a decrease in manufacturing confidence, particularly in terms of operating results and costs. The non-manufacturing sector also witnessed a dip in confidence across various business groups, with the trading sector experiencing a significant decline in confidence related to operating results and trade activities.

A notable factor contributing to this decrease in confidence is the high cost of living, which has placed pressure on the purchasing power of consumers, making them more cautious about spending. As a result, businesses have faced the challenge of raising product prices while being wary of affecting consumer demand in a fragile economic environment characterized by cost pressures.

While confidence in the manufacturing sector saw an increase among most businesses, it remained below the 50-point threshold. Notably, the food and beverage production group experienced increased confidence due to rising demand from both domestic and foreign consumers, resulting in a notable uptick in production confidence.

However, the electrical appliance and automobile production groups reported increased confidence in various aspects but still remained below the 50-point threshold. This trend reflects the impact of a slowdown in global demand and high inventories among trading partners, which had a dampening effect on confidence, especially in the electronics manufacturing segment.

Looking ahead, the sentiment index for the next three months increased to 54.1 from the previous month’s 53.3. This upward trend was observed across almost all components and industries. Notably, the electrical appliance production group reported significantly improved confidence in operating results and exports. Additionally, a more stable political landscape led to a notable boost in confidence within the construction sector.

While overall sentiment has improved compared to the present, it is important to note that the confidence index remains above the 50-point mark, suggesting that optimism still prevails despite the ongoing challenges faced by businesses in Thailand. The evolving economic landscape and cost pressures will continue to shape the country’s business environment in the coming months.

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