Industry Horizon (January 2023)

Key environments influencing the outlook of Thailand’s industry

 

Global value chains are shortening as countries are moving to increase their self-reliance and to boost their capacity for domestic technological innovation

 

Modern technology transforming industry towards growth sustainability

ESG goals will help companies grow sustainably, though this may also put pressure on some heavy industries

Regulatory changes affecting Thai industry

Important sectors generally show improving prospect

 

Automobile: Normalized demand following economic recovery and easing of chip shortages

 

Private Hospital: Enjoy a steady growth from a return of foreign patients and healthcare concerns

Industrial Estate: Demand increasing on improved confidence and infrastructure spending especially in EEC

Hotel: Foreign arrivals expected to meet pre-COVID level in early 2025

 

Modern trade: growth will return to normal level thanks to the reopening to international tourism, while high inflation and household debt remain major headwinds

Construction: Public construction growing further on a progress of megaprojects investment

 

The ONI Index indicates that in 2023 the global climate will gradually return to neutral. However, Thailand will still face slightly more-than-average rainfall and hence low risk of drought

 

Cassava: Demand improves from downstream industries both in Thailand and abroad

 

Sugar and molasses: Output increases from expected favorable climate, while exports grow strongly from demand from industrial consumers

 

HDD and IC: Softer demand for HDD while IC exports strengthening going forward

 

Housing (BMR): Sales gradually strengthening with emphasis on usable space of low-rise housing

Thailand Industry Outlook 2023-2025

Macroeconomic environment: Slow global economic growth, recovery in domestic economy

• Global economy (2023-2025): The major economies will slow, while trends towards deglobalization are likely to gather strength.

• The Thai economy( 2023-2025): The effects of the global slowdown will be countered by recovery in the tourism sector and a rebound in domestic economic activity after the country has fully reopened to foreign arrivals.

Structural changes: Modern technology, servicification, shortening global value chains, ESG trends, and government’s infrastructure investment are the dominant themes for Thailand’s industry outlook.

• Modern technology is a key driver transforming Thailand’s industry towards growth sustainability amid competitive pressures from shortening global value chain and regional trade blocs. New technology and innovation will also add greater value to products in the form of servicification. With some structural problems eroding competitiveness of Thai industry, spending on government-backed megaprojects, especially works on EEC-related projects that fall under phase 2 of the Action Plan on EEC Infrastructure and Public Utilities (2023-2027), will provide opportunities for investment in downstream and related industries.

2023-25 Thai industry outlook: tipping towards a gradual recovery

• Following the COVID-19 pandemic in 2020-22, Thailand’s industries could be heading for a gradual recovery in 2023-25 but at varying degree. Of the 96 industries covered in this report, 28 are given a “rather positive” outlook. Meanwhile, industries tagged “rather negative” and “negative” outlook numbered at 19 and 1, respectively.

Hits and Misses

• With a path of recovery, we select some industries that are expected to benefit from the reopening of the country, demand from downstream industries, modern technology transformation, a strong position in global value chains and national infrastructure development. They include Automobile, Private Hospitals, Industrial Estates, Hotels, Modern Trade, Construction, and Cassava.

• However, some businesses, despite gradually recovering, may still face some challenges from sluggish global demands, excess capacity, and other uncertainties.