KPMG Financial Performance Index (FPI)

The KPMG FPI is a metric used to measure a company’s financial health. It draws from a probability to financial default model developed by leading economists1. The model  is based on eight explanatory variables encompassing financial and market variables. The score extracts raw data from the S&P Capital IQ database and ranges from 0 to 100. The lower the score, the lower the financial health. In contrast, a higher score indicates a stronger financial position.

The FPI is computed across the world, but can be broken down to country and sector level.

After enduring significant setbacks from COVID-19 restrictions in the past three years, the travel and hospitality sector in Thailand is gaining momentum again. The main drivers of this recovery include increased domestic tourism due to affordability, as well as the return of international travelers.

The energy sector, as the second strongest performer, experienced the lowest decline in FPI. This was driven by an increasing demand for coal products and the growth of independent power generation, which is supported by central policies aimed at expanding power generation.

Thailand's healthcare sector has also seen a decline in FPI due to overall economic pressures, such as inflation and dampened consumer spending. However, growth prospects for the sector remain positive, driven by Thailand’s aging population, rising government support, and the post-pandemic acceleration in digital healthcare and medical tourism.

Raw materials saw a sharp decrease in FPI. Factors negatively impacting the industry include increased operational costs, especially in the steel industry, arising from the rise of daily minimum wage announced in August 2022. Additionally, increased prices in materials caused by the Russian and Ukrainian conflict and the increased fuel tariff, which is increasing electricity costs significantly.

Companies in the Business services sector still face challenges in obtaining the right mix of in-house and external resources to manage essential operations during the post-pandemic period. In particular, businesses focusing on customer services outsourced by state enterprises are facing a weakening demand, and budgets are under review or delayed.

The agriculture sector is facing weakening demand due to several factors. These include the economic slowdown of Thailand’s key trading partners, particularly in China, where the new self-reliance policy is impacting agricultural exports. Global inflationary pressure on animal feeds has also led to substantial price increases.