Sluggish economic recovery contracts TISI for the third consecutive month. FTI urges government to promote Made-in-Thailand products.

Chairman of the Federation of Thai Industries (FTI), Mr. Kriengkrai Thiennukul, and M.L. Peekthong Thongyai, Vice Chairman of FTI, revealed that the Thailand Industry Sentiment Index (TISI) for June 2024 was at 87.2, decreased from 88.5 in May 2024 which decline for the third consecutive month. Considering the components of the sentiment index, it has been found that all factors decreased, including purchasing orders, overall sales, production volume, production cost, and turnover. This decline stems from negative influences such as the slowdown in the domestic economy due to the incomplete recovery of domestic demand. Simultaneously, the ongoing weakness in consumers' purchasing power, exacerbated by the accelerating NPL crisis—particularly in residence, automobile, credit card, and personal loans—is affecting the deceleration in domestic consumption. SMEs are confronting a liquidity crisis, lacking cash flow and loan accessibility due to stringent loan approval restrictions imposed by financial institutions. Moreover, the shortage of containers and cargo ships is ongoing, resulting in an increase in freight rates, while political instability continues to impact entrepreneurs' confidence.

Wednesday 17 July 2024 12:50
Sluggish economic recovery contracts TISI for the third consecutive month. FTI urges government to promote Made-in-Thailand products.

However, in June, tourism-promoting measures during the low season and visa exemptions are attracting foreign tourists, while foreign demand is expanding, particularly in the United States, Asian, Indian, and Chinese markets. Additionally, the depreciation of the Thai Baht benefits exportation.

According to the TISI survey conducted in June 2024, responses from 1,341 entrepreneurs representing 46 industry clubs of the Federation of Thai Industries revealed the following rising concerns: oil prices (62.4 percent), the domestic economy (63.4 percent), and domestic politics (49.4 percent). Conversely, the factors causing lesser concern include the global economy (61.9 percent), loan interest rates (57.1 percent), and the exchange rate of the Thai Baht against the USD from the exporter's perspective (35.1 percent).
The TISI forecast for the next three months is 93.4, down from 95.7 in May 2024, marking its lowest point in 33 months since October 2021. This decline is attributed to risk factors such as the increase in the minimum wage policy to 400 Baht nationwide, which has affected the confidence level in production costs, especially among SMEs. Additionally, geopolitical instability is impacting energy prices and production chains in the global market. Furthermore, the resumption of the trade war between the United States and China, with the United States announcing additional tariffs on Chinese products, may lead to more Chinese products competing in Thailand. On the positive side, an increase in government expenditure and investment is expected to provide a boost in the third quarter of 2024.

Recommendations to the Government sector

  1. Propose that the government resolve the shortage of shipping containers and address the increase in freight rates and surcharges on all routes, for example, by subsidizing transportation costs for SMEs.
  2. Propose that the government impose anti-dumping measures on foreign goods competing in the domestic market to mitigate the impact on local entrepreneurs and promote the private sector's use of Made in Thailand (MiT) goods.
  3. Expedite government budget disbursement to meet the target and allow budget-receiving agencies to set a faster delivery time frame, enabling fund disbursement by September 2024.
    In addition, the Federation of Thai Industries (FTI) has assembled the results of the TISI survey and data on economic and industry indicators from various agencies for the past three years. It is prepared as a dashboard published on the Industry Data Space (iDS) website of FTI to facilitate entrepreneurs and the public to access helpful information in their business operations. You may access the mentioned information service at www.fti.or.th/ids.

The Federation of Thai Industries (FTI) aims to "Strengthen Thai Industries for Stronger Thailand."