Automobile: Production and domestic sales are expected to grow at a slow pace with periodical supply disruption due to the tech war impacts through 2023, while exports expand on a pent-up demand from major markets.
EVs: The adoption of EVs in 1H23 grew remarkably faster than past years, especially for BEV, supported mainly by government’s subsidy programs and tax incentives.
Integrated circuit (IC): Export value is expected to grow at a slow pace in 2023, while chip shortages will persist through 2023 before easing in 2024.
Petrochemical: The business will improve steadily in step with overall economic recovery and increasing demand from downstream industries.
Refinery: The business will benefit from improving economic activities, especially from a brighter outlook for the tourism sector and rising investment in clean energy.
Power Generation: Income will rise on stronger demand for electricity that will occur alongside a fall in production costs
Chilled, Frozen and Processed Chicken Industry: Firmer demand from the food, hotel, and tourism industries will support stronger domestic sales. Likewise, exports will expand in both core and new markets, especially in the Middle East, where Thai products are gaining ground.
Chilled, Frozen, and Processed Seafood Industry: Domestic sales will be depressed by the switch by consumers to fresh products, while weak consumer spending power in overseas markets will encourage buyers to source products from lower-cost exporters.
Beverages Industry: The domestic market remains a key driver of growth, with benefit from recovery in the restaurant trade, the rebound in the tourism sector, and the impacts of higher temperatures.
Digital services and software: Income will grow strongly on greater use of learning algorithms on digital platforms to respond users’ individual needs, while enterprises will increasingly use cloud-based software to minimize resource use and meet ESG goals.
Construction & Construction Materials: Slow growth is expected in 2023 due to a combination of only gradual recovery in private-sector construction and political uncertainty that may cause delays to some infrastructure projects
Housing (BMR): The housing market will strengthen on improving real demand and the return of foreign purchasing power.
Office Building (BMR): The occupancy rate will remain low due to pressure from growth in total supply that will continue to outpace demand.
Hotel: 28-29 million foreign arrivals are forecast for 2023, and this will keep the occupancy rate at 67-68%
Private Hospital: Businesses will benefit from the return of overseas patients, while players will tend to look to new markets to expand income streams.
Modern Trade: The industry will benefit from strengthening domestic consumer spending power and the rising number of foreign tourists coming to the country.
Road transport services: Players will benefit from the rebound in the tourism sector and growth in e-commerce sales.
Sea freight services: Businesses will benefit from recovery in the Thai economy and China’s reopening.
The consequences from the El Niño in 2023-2024 will include higher temperatures, disruptions to rainfall and intermittent dry spells, lower than average overall rainfall, and reduced access to water from reservoirs and aquifers.
Clear indications of an emerging El Niño indicate that Thailand would face drought in 2023-2025.
The drought will hurt the output of several important crops, especially rice, cassava, sugarcane, rubber, and oil palm. This will put impacts on manufacturing supply chains.
Expected impacts of the drought on Thai GDP, drought is estimated to shave -0.11 ppt off GDP growth in 2023 and an average of -0.29 ppt off in each of 2024 and 2025
Farm incomes are expected to rise by 2.0-4.0% in 2023, principally driven by rising outputs.
Farm incomes should rise through 2023 on expanding output, supported by: (i) sufficient reserve water in the dams with average rainfall still occurring, and (ii) improved mitigation of plant and animal diseases, resulting in reduced losses. Meanwhile, the price decreases as a result of: (i) continuous increase in production (ii) gradual reduction in the price level from the previous high baseline (especially the southern that suffered from falling prices of oil palm (-47.0%) and rubber (-24.9%)), and (iii) several countries easing measures regarding food security by finding alternative markets to replace previous trading partners. Krungsri Research expects that in 2023 agricultural output will climb by 5.0-7.0%,while the prices decrease by (-1.0)-(-3.0)%, and as such, farm incomes will grow by 2.0-4.0%.
2024, El Niño would suppress some areas. But improving price outlook would secure growth in some crop.
Affected areas are NE, N, and W, relying on outputs which are vulnerable to drought and whose growing season will coincide with El Niño. However, better price outlook (esp. rice, durian, oil palm) help secure farm income YoY growth in E and S, while C and M region will benefit from irrigation and still-sufficient dam water.
EU-CBAM entering the transition period in October 2023, means exporters, especially in the iron and steel; and aluminum sectors, are facing emission measurement and reporting costs. However, the overall impact on Thai industry is limited as the EU is not a key market for Thailand’s CBAM products.
Appendix: The forthcoming drought on the wider economy, will have impacts on other manufacturing industries that touch on the agricultural sector.
Krungsri Research thus looked at the structure of agricultural supply chains and in particular those for goods that are most exposed to the impacts of drought, namely rice, cassava, sugarcane, rubber, and oil palm. As part of this, the 2015 Input-Output Tables (published by the Office of the National Economic and Social Development Council (NESDC)) were used to analyze production as the box below.