Japan firms' sentiment in Thailand turns negative on U.S.-China row

08, Aug. 2019

20190807_0005.jpg

BANGKOK, NNA - Business sentiment among Japanese companies operating in Thailand has plummeted over the U.S.-China trade war, with a diffusion index for the January-June period going negative for the first time since the second half of 2015.

The index fell to minus 8, down 26 points from the previous period, the Japanese Chamber of Commerce, Bangkok said Tuesday. The index was previously negative in the July-December period of 2015, at minus 4.

“The diffusion index of the first half of 2019 dropped due to external reasons such as a strong baht, China's economic slowdown and the U.S.-China trade war,” Atsushi Taketani, director of the survey and head of the Japan External Trade Organization's Bangkok office, told NNA.

The downturn also followed solid performances by the auto industry in the second half of 2018, he added.

The index is a comparison of business performance in a six-month period with the previous period, representing the percentage of companies answering business “improving” minus that of those answering “deteriorating.”

The index is forecast to turn positive for the second half of this year at 6, up 14 points from the first half.

Taketani, however, said the actual reading for the next period could be worse than the forecast because trade tensions between the United States and China have escalated since the latest survey was conducted from May to June.

Asked about the impact of U.S.-China trade friction, 46 percent responded it has a “negative effect,” followed by 22 percent who see “no effect” and 16 percent citing a “positive effect.”

With multiple answers allowed, “decrease in export volume” was cited by 45 percent of respondents, up 9 points from the previous survey, and “decrease in domestic sales volume” was picked by 44 percent, up 12 points. As for positive impacts, “transfer of production facility from China to Thailand” was picked by 18 percent, down 3 points.

The chamber surveyed its 1,760 member companies, both manufacturing and nonmanufacturing, from May to June, and 560 of them, or 31.8 percent, responded. (NNA/Kyodo)