Krungsri SME Index survey shows entrepreneurs expect economy still growing in 3Q/2019

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Mr. Sayam Prasitsirigul

Bangkok (16 August 2019) – Krungsri (Bank of Ayudhya PCL) disclosed the latest result of Krungsri SME Index survey conducted in the second quarter, showing the business confidence index for the next three months was in positive zone, but declined to 14.30 from 20.23 in the previous quarter. The result reflected most entrepreneurs’ opinion that the third-quarter economy will still grow at an even slower pace. For the overall picture, most entrepreneurs (42%) expressed concerns over economic conditions, followed by politics (15%) and labour (6%). Meanwhile, some 29% of respondents have no concerns.

Mr. Sayam Prasitsirigul, Krungsri Head of SME Banking Group, said, “The result of Krungsri SME Index survey showed that small-sized SMEs and entrepreneurs in the provinces having more negative view than medium-sized SMEs and those operating in Bangkok and the vicinity. However, the tendency of lower interest rates after the Bank of Thailand's Monetary Policy Committee’s recent decision to cut interest rates should help reduce the burden cost for SME entrepreneurs and result in confidence to improve in the second half of the year.”

However, Krungsri Research forecasts, stating that the outlook of Thai economy in the second half is likely to improve from the first half. The clarity of the government’s economic policies and the new round of economic stimulus measures will help spur domestic demand, although the drought may put pressure on farm income. The government’s support will help alleviate those affects while the recent upgrades of Thailand’s credit ratings to “positive” from “stable” will restore Thai and foreign investors’ confidence. However, public investment may rise gradually, due to delays in some state enterprises’ infrastructure projects and the delay in budget disbursements for 2020 fiscal year (October 2019-September 2020), which could affect the government’s new investment in the first quarter of 2020 fiscal year. Although exports are likely to shrink in the third quarter, hit by the impacts from the US-China trade war, it is expected that Thai exports may improve in the fourth quarter, partly due to last year’s low base, combined with lagged effects of trade and investment diversion and the relocation in some industries following trade war.

In addition, Krungsri provided the quarterly survey conducted nationwide in June 2019 also asked about the understanding of peer-to-peer lending (P2P) among SME entrepreneurs. The survey showed 89% of nationwide respondents in every size and every segment did not know and lacked understanding of the P2P lending. However, some 42% of respondents are keen to seek loan via P2P lending because of 1) increase access to funding sources (52%) 2) convenience as transaction can be executed via online platform (20%) and 3) lower interest rates (19%). When asked if they are interested in providing loans via P2P lending, 73% of them were not interested due to concerns about high risk of bad debt (35%) and doubt about system security and data security (14%) respectively.


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