IMF sees big challenges for the global economy, shaped by lingering effects of the Russian-Ukraine war, a cost-of-living crisis, and economic slowdown in China
The IMF projects global growth will slow down from 3.2% in 2022 to 2.7% in 2023 (0.2 percentage points below July forecast). There is a 25% probability that 2023 growth could fall below 2%. More than a third of the global economy will contract this year or next. Downside risks remain elevated.
Global manufacturing activity has dropped to contraction zone despite easing supply disruption; weaker orders suggests trade flows will continue to slow down
Krungsri Research Forecasts for 2022-23
Thailand’s overall economic activity has almost returned to pre-pandemic level but recovery is fragile and uneven across sectors
Factors influencing Thai industrial outlook
Automobile: Growth in output of autos over 2022 and 2023 will be driven largely by the strength of the domestic market.
Chip shortages: Problems with chip shortages will likely begin to abate at the end of 2023, when demand for use in electronic goods will begin to ease and new supply will start to come onstream.
Refinery: Gross refinery margins will tend to narrow in 2023 with softening crude prices and the slowing of global growth.
Petrochemical: The high cost of crude is lifting the cost of inputs, while weakening demand is tightening spreads.
Chemical Fertilizer: Due to the high prices set on global markets, imports of the chemical inputs needed to make fertilizer will remain expensive.
Compared to the past 5 years, rainfall and reservoir levels are high, though they remain significantly lower than in 2011, the year of the Great Flood.
As of the end of Sep-22, Thailand’s reservoirs were 74% full. This compares to the 69% achieved this time last year, and it is expected that by Oct, this will have risen to a high of around 80-85% across the country. This is a result of this year’s moderate La Niña, though heavier than usual rainfall has also led to widespread flooding and damage to property and crops in the northeast, east, and central regions, most especially in rice, sugarcane, and cassava growing areas.
Rice: Demand for rice will remain strong but yields may be limited by the rising cost of fertilizer.
Cassava: Demand for cassava will strengthen on improving conditions in downstream industries.
Chilled, Frozen, and Processed Chicken Industry: Exports bode well on rising demand for food security and new export opportunities to the Middle East countries
Digital Services and Software: Income will continue to strengthen with strong demand and growth in the uptake of services offered by online platforms.
Construction Contractor: Investment was suppressed in 2022 by the high cost of transport and construction supplies, but recovery in demand will help to stimulate the market in 2023.
Housing in BMR: The market will strengthen with overall economic growth but rising inflation and the working out of the current cycle of interest rate hikes will weigh on demand.
Retail Space: Growth in demand for rented retail space is likely to lag behind the expansion in supply and so occupancy rates will tend to worsen.
Hotel: Both international and domestic tourism will strengthen, but occupancy rates will remain below their long-term average in 2023.
Private Hospitals: Income will be boosted by the return of both Thai and overseas patients.
Modern Trade: Sales will gradually recover in step with the rebound in the economy, but the high cost of living means that spending power remains weak and fragile.
Air passenger services: The business environment will improve with the overall recovery in the tourism sector.
Sea freight services: Income will tend to soften with the slowing of global trade.