Brighter economic prospects ahead

Bangkok--11 Nov--Grant Thornton Grant Thornton Brighter economic prospects aheadEmbargoed until 11 November 2010 The “Grant Thornton International Business Report: Thailand Country Focus 2010 (IBR)” was released today by Grant Thornton Thailand. The Report compares Thailand with 35 other countries across a range of indicators, including economic optimism, employment, revenue expectations, business constraints, profitability expectations, support of lenders, merger and acquisitions, and foreign talent. Global perspectives The Grant Thornton International Business Report (IBR) 2010 surveyed the views of over 7,400 leaders of privately held businesses (PHBs) in 36 economies around the world. In comparison to the year 2009, this year’s report reveals that businesses in almost all countries are more optimistic about economic prospects for the year ahead. For the first time in six years, India has been overtaken as the most optimistic country by Chile. Chile now is the most optimistic with a net balance of +85 per cent (-24 per cent in 2009), while India comes in a very close second with a net balance of +84 per cent. Japan remains at the bottom with a net balance of -72 per cent. Overall optimism amongst businesses globally hasrisen from 2009; this year an overall balance of +24 per cent of businesses across all countriesare positive about their country’s economy — compared to a balance of -16 per cent in 2009. In Thailand, this year’s report focuses on the country’s experiences and attitudes of its businesses, how they are affected by the economic crisis, and how Thailand has dealt with the economic recovery. Local insight Thailand has seen brighter prospects for new business opportunities as well as a recovery for exports, despite the political unrest and sluggish tourism industry in Q1-2. Ian Pascoe, Managing Partner of Grant Thornton Thailand, notes, “Thailand’s overall business environment in 2010 was significantly better than last year although unfortunately the political instability in the first half of this year has led to a drop in tourist arrivals. Notwithstanding, Thailand’s GDP has unexpectedly grown by 0.2 per cent in Q2. This compares against earlier forecasts of a 3.5 per cent contraction that was expected to follow the severe political unrest experienced in the country. Our report shows that businesses in Thailand are considerably more optimistic this year with the outlook for the economy, although less than half expect to see an upturn in the global economy by the end of 2010. Moreover, the profitability expectations of businesses has increased significantly and the balance of businesses expecting to increase profits in Thailand has risenthis year by 50 percentage points to +30 per cent.” The Grant Thornton IBR 2010 reveals that the Thai economy achieved double-digit year-on-year GDP growth in the first quarter of 2010, primarily due to exports. However, this has been marred by the red shirt protests in March 2010, which have had a significant impact on the tourism sector. What is becoming apparent though is that increased international competition means Thailand will have to increase both its skilled labour and productivity in order to effectively compete in the long-run. Other key indicators are highlighted below: Thai exports for June rose by a reported 46 per cent year-on-year to US$18bn; imports increased by 40 per cent at US$16bn, to give Thailand a US$2.3 billion trade surplus. Businesses in Thailand are considerably more optimistic about prospects for 2010; their optimism/ pessimism balance has increased dramatically from -63 per cent in 2009 to +12 per cent in 2010. A balance of +28 per cent of businesses in Thailand expect employment to grow in 2010, compared to -1 per cent for the previous 12 months, whilst the Asia Pacific average has risen by 25 percentage points, from +8 per cent in 2009 to +33 per centExpectations for revenue have risen by 53 percentage points to +39 per cent this year, up from -14 per cent 12 months previously? Expectations for profitability are now higher than the Asia Pacific average (26 per cent) Looking ahead Thai GDP is forecast to expand by 5.5 per cent in 2010, boosted by growth of the Thailand’s trading partners, especially Asia, which is expected to drive export growth to 11.3 per cent in 2010. Imports are also expected to increase by nearly 15 per cent as demand from manufacturing industries and private consumption rises. Tourism is expected to pick up towards the end of the year as it is believed it will take six months to recover from the protests. Of concern are the conference and seminar markets. These events are planned some 18 month to 2 years ahead of time and the previous political disruption has made a number of organisers look elsewhere in Asia. Therefore, we forecast that the recovery in this sector will be protracted. In 2011, GDP is forecast to slow, as exports are not expected to grow at the same rate seen in 2010. Thailand’s export growth is very sensitive to the global economic conditions and we still remain concerned as to the economic health of the United States and Europe. A general election is to be called in 2011 and if the recent unrest resurges, economic confidence could well be hit. As a result, both consumer spending and investment are set to grow but withwe do not expect the levels of growth seen in 2010. About IBR The Grant Thornton International Business Report (IBR) is an annual survey of the views of senior executives in privately held businesses all over the world. Launched in 1992 in nine European countries the report now surveys over 7,400 businesses in 36 economies providing insights on the economic and commercial issues affecting a segment often described as the ‘engine’ of the world’s economy. In Thailand 150 businesses were surveyed. These businesses ranged from small to large in size with total employees of between 20 and 599. To find out more about IBR and to obtain copies of reports and summaries visit: www.internationalbusinessreport.com. Participating economies include Argentina, Armenia, Australia, Belgium, Botswana, Brazil, Canada, Chile, China, Denmark, Finland, France, Germany, Greece, Hong Kong, India, Ireland, Italy, Japan, Malaysia, Mexico, Netherlands, New Zealand, Philippines, Poland, Russia, Singapore, South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, United Kingdom, United States and Vietnam. About Grant Thornton Thailand Grant Thornton Thailand is well recognised by the business community as one of the leading professional service firms in Thailand since 1991. We have helped many clients successfully navigate the Asian economic crisis of the late 1990s, applying a mixture of techniques including debt restructuring, cost cutting and business plan revision. We have also helped many clients grow through acquisition and look into expansion opportunities. Our services include business consulting, external and internal auditing service, domestic and international tax planning, corporate finance advisory, restructuring and reorganization, merger and acquisition, forensic/investigation, risk management, finance & tax due diligence, transaction support, valuation, exit strategies, executive recruitment, succession planning and remuneration planning. To learn more about our firm, please visit our web site www.grantthornton.co.th. Further enquiries, please contact: Ian Pascoe Lakpilai Worasaphya Managing Partner Senior Manager, Marketing and Communications Grant Thornton Grant Thornton T: 02 205 8100 T: 02 205 8142 E: [email protected] E: [email protected]