As Thailand cautiously reopens its doors to the outside world, businesses around the country are preparing their strategies for recovery and growth. Effective planning, however, requires an understanding of the business landscape moving forward – and new research is shining an important light on the shape of things to come.
The recent Fitch Ratings report on Thailand provides important macroeconomic context for the months ahead, while the forthcoming Grant Thornton International Business Report (IBR) will be a key indicator of business perspectives heading into 2022. Here we summarise some of the key insights, particularly from the Fitch data, with additional commentary by the team at Grant Thornton, a leading audit firm in Thailand.
According to Fitch, worldwide GDP is on track to increase by 6% in 2021 – with growth trends limited by the spread of the COVID-19 Delta variant, which kept many businesses closed and disrupted supply chains.
Further analysis by Grant Thornton in Thailand highlighted onerous government regulations, and a lack of accessible finance, as additional stumbling blocks for businesses. CEO and Managing Partner Ian Pascoe advises businesses to strategise with these difficulties in mind. “Businesses should re-stock their warehouses early and often in order to pre-empt delays, while also making internal adjustments to increase liquidity,” he said.
Expectations for APAC
Fitch projects growth across APAC to average 6.3% in 2021, and 5.3% in 2022, with Taiwan and China taking the lead due to their success in containing the virus.
Grant Thornton Tax & Legal Partner Tanva Mahitivanichcha notes the potential impacts of an uneven recovery across the region. “As countries like the Philippines, Indonesia, and Vietnam continue to lose time battling the virus, investors across APAC will instead pursue attractive opportunities in the faster recovering countries,” he said. “This trend could magnify the head start enjoyed by countries that have already vaccinated their populations, while a lack of investment makes liquidity even harder to access in the nations that are still struggling.”
The Outlook for Thailand
Thailand’s recovery has thus far proceeded more slowly than anticipated, with the Finance Ministry recently revising its 2021 GDP growth projection down to just 1%. Still, with tourism and exports beginning to rebound, the overall economy is expected to increase by a 3% rate in Q4, followed by 4% in 2022.
Analysis from our audit firm in Thailand indicates that such growth is indeed possible – provided the government raises its domestic spending and provides real private sector support through stimulus packages. An ageing population and high household debt remain indicators to watch out for, as hope for a speedy recovery depends in large part on robust consumer spending.
Chris Cracknell, Chairman of Grant Thornton in Thailand, reminds businesses that external trends do not dictate destiny. “Well-run companies in stagnant industries can still perform well, just as poorly run companies in growing industries will tend to fall behind,” he said. “External variables like GDP are undoubtedly important, but business leaders should spend more time focusing on things they actually can control – like their own company’s strategy, structure, and operations.”
For expert guidance during the post-pandemic recovery, contact Grant Thornton today.