Most of the world's economies still face inflation issues that spread continuously. Moreover, there are rising interest rates and cost of living crises. Furthermore, there is a prolonged war between Russia and Ukraine, and COVID-19 is recovering in China. In addition, the supplier inventory of trading partners remains high. As a result, trading partners have delayed their purchase orders. Besides, the production cost remains high. In particular, the cost of energy prices increases mainly from electricity costs. These factors contribute to the slowdown in the economy, which affects the export sector. Recently, many countries have given more importance to climate change and environmental issues such as Net-Zero Emission, Zero-Deforestation, Sustainability, etc. Meanwhile, the business and industry sectors should prepare and adapt to the trend. The International Monetary Fund (IMF) has recently forecast that global growth will decline to 2.9% in 2023 but increase to 3.1% in 2024.
Thailand’s economy tends to continue to recover. The return of Chinese tourists will drive the tourism sector and private consumption to recovery. The Monetary Policy Committee has considered that a gradual and continuous increase in the policy interest rate was a policy implementation with the prospects for economic recovery and inflation. The result of the 1st Monetary Policy Committee meeting in 2023 was that the committee unanimously resolved to raise the policy interest rate by 0.25% per year, from 1.25% per year to 1.50% per year, effective immediately. In addition, the committee will closely monitor developments in financial markets and volatility in the foreign exchange market under the framework of monetary policy aimed at maintaining price stability.
The Thailand Industrial Sentiment Index (TISI) in January 2023 rose to 93.9 from 92.6 in the previous month due to domestic demand expansion, the Shop Dee Mee Kuen (shopping with refunds) scheme, and the tourism sector recovery. However, there were negative factors, including slowdowns in foreign demand, a global economic recession, rising energy prices, baht appreciation, and rising loan interest rates. Overall, Thailand's consumer confidence index was reported at 51.3 in January 2023, up from 50.4 in the previous month.
In terms of Thailand’s international trade in December 2022, Thailand’s export income value was 776,323.57 million baht, down 6.08% YoY but up 8.26% compared with the previous month. Meanwhile, Thailand’s import value was 823,081.46 million baht, down 3.34% YoY and down 9.27% compared with last month. Thailand's trade balance in December 2022 recorded a deficit of 46,757.89 million baht (Ministry of Commerce, 2022).
According to S&P Global, the Manufacturing Purchasing Managers' Index (PMI) increased to 46.9 in January 2023 from 46.2 the previous month due to a decrease in demand and new orders in domestic and international, inflationary pressure, and an economic slowdown. In January 2023, Thailand’s PMI stood at 54.5, up from 52.5 the previous month. In December 2022, the manufacturing sector expanded due to rising production, new orders, labor, and raw material stock.
The American Petroleum Institute (API) announced that crude oil inventories increased by 6.3 million barrels for the week ending January 27, 2023. Overall, crude oil prices were stable after the market kept an eye on the Federal Reserve (FED) meeting results, which will increase the interest rate. Furthermore, China’s crude oil demand tended to increase, although the number of COVID-19 cases continued rising. As a result, it might affect the domestic demand for crude oil. However, the market kept an eye on the OPEC+ Joint Ministerial Monitoring Committee (JMMC) Meeting to see if they would follow the former plan to reduce production. On January 31, 2023, West Texas Intermediate (WTI) and Brent crude oil prices stood at 78.87 and 84.49 USD/barrel, respectively.
The average rubber prices announced by the Central Rubber Market in Songkhla in January 2023 were slightly changed compared with the previous month, and the foreign futures prices increased. The market was concerned about powerful countries’ economies, and the protracted Ukraine-Russia war caused slowdown market. Northern and northeastern Thailand was still in winter. On the contrary, rain in southern Thailand decreased. However, the northeast monsoon still blows over the Gulf of Thailand and the southern part periodically, causing heavy raining in some places. In addition, baht appreciation might have a long-term effect on the economy. In December 2022, Thailand exported 388,920 tons of natural rubber (including compound rubber), generating an export income of 18.9 billion baht. In the tyre sector, Thailand exported 9.7 million units of all tyres for a total value of 17 billion baht.
In December 2022, Thailand’s car production was 158,606 units, up 2.75% YoY, including production for export of 85,766 units (54.07% of all production) and domestic sales of 72,840 units (45.93% of all production). In 2022, Thailand produced 1,883,515 cars, up 11.73%YoY. Meanwhile, Thailand's domestic car sales in December 2022 were 82,799 units, up 21.26% compared with the previous month but down 9.02% YoY due to semiconductor chip shortages in some car models.
Disclaimer: The information contained herein is obtained from a variety of sources and the dissemination of information is for the purpose of providing information to interested parties only. The Thai Rubber Association is not responsible for any damages that may occur from the use of this information by any person.
