MACROECONOMICS WEEKLY UPDATE

The Ministry of Finance is maintaining its economic growth outlook for 2023 at 3.8%, helped by a rebound in tourism and domestic demand, but exports are still expected to slow down this year.

Pornchai Thiraveja, head of the ministry’s fiscal policy office, told a briefing that the Thai economy likely expanded 3.0% in 2022, down from a previous forecast of 3.4%, as exports, public investment and private consumption slowed.

 

Official gross domestic product (GDP) figures for 2022 are due to be released next month. In 2021, GDP grew 1.5%, among the lowest rates in the region.

Pornchai also noted that the tourism sector has been picking up steadily as the world relaxes international travel measures.

The tourism sector started rebounding last year with 11.15 million foreign tourist arrivals. Since the new year began, Thailand has booked 1.34 million foreign tourists.

Pornchai added that the kingdom is expected to receive 27.5 million foreign arrivals this year, up from 21.5 million projected earlier, helped by China’s reopening.

The government is projecting at least 5 million Chinese visitors this year, about half of the figure in pre-pandemic 2019.

Overall foreign tourist arrivals reached a record of nearly 40 million in 2019, with spending at 1.91 trillion baht (US$58.07 billion). Tourism accounted for about 12% of GDP.

 

Exports ,another key driver of growth  could increase just 0.4% this year, rather than rise 2.5% as projected earlier due to a global slowdown.

The ministry meanwhile predicts the baht to average 32.5 per dollar this year after 35.07 last year, as Thailand is among the countries expected to see a continued economic recovery.

Pornchai said average headline inflation is expected at 2.8% this year, down from a 24-year high of 6.08% last year, which was far above the Bank of Thailand’s target range of 1% to 3%.

 

The value of Thai merchandise exports in November was US$22,308 million, contracting -6%YOY (compared to the same period last year), continuing from -4.4% in October, marking the second consecutive month of contraction.After 20 months of continuous growth compared to the previous month on a seasonally adjusted basis. November’s export figure recovered 2.5%MOM from a sharp contraction of -8.5%MOM in the previous month.

For the first 11 months of 2022, exports still expanded by 7.6% to $265 billion while imports rose by 16.3% to $280 billion, resulting in a trade deficit of $15 billion.

 

The overall picture of exports by commodity group in November contracted in almost all groups : 

(1) agricultural products contracting by -4.5% continually from -4.3% in October.

The export of rubber contracted significantly due to the decline in global demand during the COVID-19 crisis,

while processed chicken Chilled and frozen chicken, fresh, chilled, frozen and dried fruits expanded well in this month.

 

(2) Agro-industrial products slightly increased by 1% from a contraction of -2.3% in October.

Which has been a good export group for 20 months, with exports of sugar and wheat products and other ready-to-eat foods expanding well

 

(3) manufacturing products contracted by -5.1%, up from -3.5% in October The continued growth in product groups included automobiles and parts,

5.5% slightly accelerating from the previous month’s 5.1%, as well as electrical transformers and parts. gems and jewelry (excluding gold) and motorcycles

and parts Major industrial goods contracted, such as computers and equipment, chemicals, unwrought gold, plastic beads, aircraft, space vehicles and parts.

Internal combustion piston engines and components, iron, steel and products

 

(4) Minerals and fuels continued to contract -35% from -23.9% in the previous month due to lower demand and slower price factors.

 

Exports by market as a whole continued to contract reflected a sharp slowdown in the following  global demand: 

(1) the Chinese market contracting for the sixth consecutive month at -9.9%;

(2) the US and European markets (EU28) turned around to expand from the contractions in the previous month.

But the growth was low compared to the previous period of 1.2% and 3.3%, respectively, in line with the signs of an economic slowdown.

(3) The CLMV market, which used to grow well, contracted for the first time in 15 months at -0.3% from 10.6% last month.

ASEAN5 contracted by -15.5%, compared to a contraction of -13.1% in October. However, the Middle East continued to expand and

was the only major market for Thai exports for 10 consecutive months.

 

The Industry Ministry has signed a memorandum of understanding with Ishikawa prefecture in Japan to forge links between local Japanese and Thai businesses, government spokesman Anucha Burapachaisri said on Tuesday.

Ishikawa is the 23rd of Japan’s 47 prefectures to sign an MOU with Thailand to promote industrial cooperation under the theme of “Otagai”, which means “to help each other”, said Anucha.

On the Thai side, the Department of Industrial Promotion will match cluster industries in Ishikawa – including machinery, textile and fibre, food and agriculture – with suppliers and partners in Thailand.

Both sides also agreed to participate in the 22nd Otagai Forum in Nanao City, Ishikawa, on February 22 to promote collaboration in the carbon-fibre-reinforced polymer and food processing industries and the bio-circular and green (BCG) economy.

 

The ministry will also promote Thai industries to Japanese investors in Ishikawa.Over 6,000 Japanese businesses currently operate in Thailand, said Anucha.

The MOU follows a January 11-15 roadshow held by the ministry in Ishikawa to generate Japanese investment for Thailand’s electric vehicle and smart technologies industries. The roadshow was expected to bring up to 10 billion baht in investment, focused on the 12 targeted S-Curve industries in the Eastern Economic Corridor.

JD.com to Shut Services in Thailand and IndonesiaChina’s JD.com will close its e-commerce services in Indonesia and Thailand, retreating from Southeast Asia after a bruising year for China’s retail and technology sectors.Local websites showed JD.com will end its services in Thailand from March 3 and in Indonesia from the end of the same month. Both units will stop taking orders on February 15.A spokesperson for JD.com said in a statement on Monday that the company will continue to serve global markets, including Southeast Asia, through its supply chain infrastructure.

The company, which did not give a reason for the closures, started its e-commerce operation in Indonesia under the name JD.ID in 2015 as a joint venture with Provident Capital, while the Thai platform was launched two years later with the kingdom’s largest retailer Central Group.However, JD.com failed to gain traction against larger players such as Alibaba Group’s Lazada, Sea Ltd’s Shopee and GoTo Group’s Tokopedia.

The company, which also runs the omni-channel retail brand Ochama in Europe, said in November that “new businesses” – including units abroad as well as other ventures such as JD property – accounted for just 2% of total revenue in the third quarter.In China, the company, like many of its tech peers such as Alibaba, has been battling a slowing economy and the impact of strict curbs, which have prompted cost cutting and worker layoffs.While JD.com has performed better than its peers, posting an 11.4% rise in third-quarter revenue, its chief executive has described the second quarter as the most difficult one since listing in 2014.

                             

Thailand’s manufacturing output continued to expand in December, but new order volume had slipped, due to the deterioration in economic conditions and consistently high inflation underpinned the decline in new business with international demand falling which will be a drag for the manufacturing side in the coming of months.Despite all of this, factory managers remained optimistic in December because firms are hopeful that sales can improve as economic conditions recover.

Meanwhile, Inflation is expected to drop down to the Bank of Thailand’s 1% – 3% inflation target in the medium-term horizon for the year 2023.The Thai baht Support 33.50 with Resistance of 34.50 leaning towards strength due to the weakening dollar trend and foreign demand for Thai bonds in the recent week.

INDUSTRY

Agriculture

Demand stable as rice export target 7.5m tonnes

Thailand has set a rice export target for this year of 7.5 million tonnes which is slightly lower than the 7.69 million tonnes exported in 2022 with the volatility of the baht a key concern as it will make

Thai rice more expensive than the grains of its competitors.

The government has approved a 7.64-billion-baht income guarantee scheme for rubber farmers for the 2022-23 season for the fourth consecutive year. The scheme covers 1.60 million rubber farmers 

with a combined 18.2 million rai of rubber plantations. Of the total, plantation owners and tenant farmers account for 1.37 million people, with 231,514 rubber tappers.

The income guarantee scheme for farmers offers compensation if rubber market prices fall below the benchmark.

Manufacturing

Thailand’s factory output in December dropped more than expected, as a global slowdown hit demand for Thai exports.

In December, the manufacturing production index (MPI) contracted 8.19% from a year earlier, weighed down by lower production of hard disk drives and plastics pellets.

Factory output is likely to fall again in January due to slowing global demand and a high base despite some support from increased domestic activity. In 2023, the ministry forecast output would

increase 2.5%-3.5%, after a 0.62% rise in 2022.

Banking

LH Bank supports a loan of 462 million baht to Thonburi Healthcare Group Plc. Land and Houses Bank Public Company Limited (LH Bank) jointly signed a loan grant of 462

million baht to Thonburi Healthcare Group Public Company Limited to purchase ordinary shares of Trang Wetchakit Company Limited operating TRPH hospital business (TRPH) in Trang Province.

Tourism

The Tourism Confidence index of the final quarter last year stood at 72, up by 7 points from the third quarter from 740 tourism operators across Thailand between Nov 20 and Dec 14. The index

reflected weak tourism, as a reading below 100 indicated low confidence among the industry.

Among all types of tourism businesses, spa and massage operators reported the highest confidence in the fourth quarter at 85, followed by tours and transportation at 82 and 72, respectively,

mainly attributed to an influx of 5 million tourist in the final quarter, an increase from 3.6 million in the third quarter.

Meanwhile, entertainment venues came up with the lowest confidence at 61 due to the slowest rate of recovery and high operating costs.Most tourism operators earned about 60% of pre-Covid revenue during the final quarter andthis was expected to improve to 64% in the first quarter this year.The most pressing issue is the labor shortage currently.

Industrial

WHA Group Public Company Limited (WHA)

Ms. Jareeporn Jarukornsakul Chairman of the Board of Directors and Group Chief Executive Officer WHA Group Public Company Limited (WHA) announces 5 business strategies to create

sustainable growth. Target total revenue and share of profit from normal operation for 5 years (66-70) at 100 billion baht, ready to inject investment budget worth 68.5 billion baht in 5 years while

maintaining EBITDA margin above 40% and Interest-bearing debt to equity (IBD) ratio of less than 1.2 times In this year, WHA announces 5 business strategies.

1. Maintain the number one position in the country by being number one in every businessof the organization.
2. Accelerate business expansion abroad, focusing on Vietnam
3. Use digital innovations and new technologies to enhance the customer experience.
4. Create sustainable growth by developing new products and services with a focus on sustainability.
5. Apply technology to develop into a highly efficient organization and aiming to become a Technology Companinitiated 9 "Mission to the Sun " missions aimed at creating products. and new services Including to satisfy customers. and strengthen the development of theorganization and personnel of the company Key projects include Green Logistics, Digital Assets (Metaverse), Digital Health Tech, Circular, etc.

ASW

ASW kicks off in 2023, launching 12 new projects worth over 22.5 billion baht, boosting sales and revenue New high.The company plans to launch the highest number of new projects since the start of business, totaling 12 projects with a total value of over 22.5 billion baht, with sales growth targets set at 15 billionbaht. million baht, an increase of 14 billion baht from the previous year and the target to recognize revenue this year at 7.2 billion baht.

KUN

Launches 3 new projects worth more than 11 billion baht, pushing sales – new high incomeReady to penetrate new business channels.

 At the end of 2022, the company has backlog sales on hand worth 180 million baht, which will gradually be recognized in the first quarter of 2023, while this year plans to launch 3 new projects worth

more than 11,600 million baht. Baht is considered the highest value in the history of the company.The launch of a new project this year will result in KUN being successful in developing residential

projects under "Villa Kunalai " in all 4 directions around Bangkok and its vicinity as planned. Since 2 new projects are located in the northern zone of Bangkok, namely "Kunalai Navara Rangsit-Klong 2" and "Kunalai Navara Rama 2", located in the southern zone of Bangkok. West of Bangkok (Bang Bua ThongZone) and East of Bangkok (Chachoengsao Zone)

Commerce

JD Central

The Online shopping platform JD Central (www.jd.co.th) announced on Monday that is was discontinuing operations in Thailand on March the 3 rd with customer service becoming available until

March 31 st for after sales services.

Central Retail Corporation Plc  (CRC)

Central Department Store Co under Central Retail Corporation Plc (CRC) plans to allocate billions of baht to renovate Central Robinson branches this year.

Renovation has begun at Central Chidlom, aiming to make it a more luxury boutique branch with expensive foreign brands and exclusive products and services. The company is considering extending the retail space of Central Department Store in the second phase of Megabangna this year in response to the changing retail landscape in the Bang Na district.

 

USD/THB

The USD/THB support and resistance is at 32.40 and 33.00 due to dollar weakening trend and capital inflows in the early beginning of the year even after the Federal Reserve reiterated its

commitment to keep hiking interest rates.