In September, Thailand’s Industrial Confidence Index experienced its third consecutive decline, plummeting from 91.3 in August to 90.0, according to a report by the Federation of Thai Industries (FTI). The dip in this key economic indicator is chiefly attributed to a deceleration in the manufacturing sector, primarily influenced by reduced domestic buying power and an overall sluggish global economic landscape.
Kriengkrai Theinnukul, Chairman of the Federation of Thai Industries, points to several factors contributing to this downturn. These include a decrease in household debt, diminished agricultural income, and weakening demand from international trade partners, with China being of particular concern. Furthermore, entrepreneurs are grappling with elevated financial costs due to the recent policy rate hike by the Bank of Thailand (BOT).
The FTI anticipates a continued decline in the Index over the next quarter, with forecasts indicating a drop to 97.3 from the previous figure of 99.5. However, there is optimism for the remainder of the year, as Thailand is expected to see a modest economic boost, partly due to a visa-free policy, despite ongoing geopolitical tensions that have impacted energy and commodity prices.
In response to the economic challenges, the FTI has proposed a set of three key recommendations to the government. First, they urge the BOT to minimize the interest rate gap between deposits and loans. Additionally, the FTI emphasizes the need for the swift establishment of a “Virtual Bank.” They also call upon the Thai Industrial Standards Institute (TISI) and the Customs Department to intensify their efforts to prevent the import of substandard products. Lastly, the federation suggests promoting renewable energy trading by offering incentives for excess electricity sales through the Net Metering system.
Furthermore, the FTI is actively preparing for the upcoming 2023 Foreign Industrial Club (FIC 2023) Event, scheduled for November 1st. This event, themed ‘Reformation of Thai Economy Amidst Polycrisis,’ aims to provide a platform for critical business discussions involving both public and private sectors, not only from Thailand but also from abroad. The event is expected to see participation from high-level government officials, including Prime Minister Srettha Thavisin, as well as diplomats and foreign investors, all coming together to address the economic challenges facing Thailand in the context of the global economic landscape.