Household debt impedes TISI: Freeze diesel & LPG prices to ease burden

Taking into account the components of the sentiment index, it has been observed that overall sales, purchasing orders, production volume, and turnover have decreased compared to the previous month.

This decline is attributed to the deceleration in domestic demand, which raises concerns about the cost of living and household debt, thus impacting population spending habits negatively. Additionally, there has been a consistent slowdown in exports due to the prolonged weakness in the economies of trade partners, particularly China and Japan.

Furthermore, the ongoing conflict in the Red Sea area has affected the import-export sectors, especially in European and Middle Eastern markets. Moreover, entrepreneurs are facing increased 
market competition, exacerbated by the influx of cheap and inferior products from foreign countries, which is impacting sales. Additionally, energy costs have risen, adding further strain on businesses.

On the other hand, there are positive factors stemming from the consistent recovery of the tourism sector, attributed to the Visa policy for Chinese, Kazakh, and Taiwanese visitors.

Additionally, the implementation of the Easy E-Receipt measure has contributed to energizing domestic expenditure during the period from January 1 to February 15, 2024. Furthermore, the freezing of diesel fuel prices at 30 Baht per litre from January 1 to March 31, 2024, has had a positive impact on various business sectors.

According to the TISI survey conducted in February 2024, responses from 1,316 entrepreneurs representing 46 industry clubs of the Federation of Thai Industries revealed that the factors causing rising concerns among them are as follows: the global economy, with 85.1 %; loan interest rates, with 74.3 %; oil prices, with 53.7 %; and the domestic economy, with 48.5 %, respectively. Conversely, factors causing lesser concern include the exchange rate of the Thai Baht against the USD (from the exporter's perspective), with 38.0 %, and politics, with 31.2 %, respectively.

The TISI forecast for the next three months is 100.0, an increase from 98.4 in January 2024. This uptick is attributed to supporting factors, including the government's tourism promotion measures, which encourage domestic expenditure and consumption.

Additionally, government spending is expected to rise in Quarter 2 of 2024 following the approval of the Annual Expenditure Act for the Fiscal Year of B.E. 2024. However, there are still factors that need monitoring. These include the increasing volatility of the global economy, primarily due to the slowdown in the Chinese economy. Geopolitical risks also pose a threat, potentially impacting export sectors.

Furthermore, the drought crisis resulting from El Niño could affect industries reliant on raw materials from the agriculture sector. These factors require careful attention and management to ensure stability and growth in the coming months.

Recommendations to the Government sector

1.    Request the government to provide additional economic stimulus measures to bolster domestic expenditure and consumption, with a particular focus on promoting tourism.

2.    Request the government to extend measures freezing diesel fuel prices at 30 Baht per litre and LPG prices at 423 Baht per tank size of 15 kilograms beyond their current expiration date of March 31, 2024.

3.    Encourage SME entrepreneurs to actively participate in government procurement processes, to increase SMEs' share of procurement to at least 50 per cent of the budget, particularly within local government agencies.

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.”