Thailand Microeconomic Weekly Update #56

THAILAND MACROECONOMICS WEEKLY UPDATE

Manufacturing production decreased 6.27% year on year for December from a downturn in car production against a forecast of 3.2% attributed to high household debt, increased borrowing costs, and downgraded economic growth.

 

On January 31, the Oil Fuel Fund Committee (OFFC) sanctioned the implementation of a subsidy mechanism, approving a reduction of 1 Baht per liter in the price of benzene effective from February 1. According to reports from the Labour Ministry, the economic contribution from the 118,080 Thai nationals employed abroad amounted to 58.62 billion Baht in the first quarter of fiscal 2024.

 

 

 

In January, Thailand’s business sentiment experienced a decline, particularly in the non-manufacturing sector, which recorded a sentiment index of 48.0, down from 49.1 in December 2023. This downturn was attributed to a decrease in total order book confidence following the peak sales period during the New Year. Additionally, the S&P Global Thailand Manufacturing Purchasing Managers Index (PMI) fell to 45.1 in December, compared to 47.6 in November. Concurrently, the Bank of Thailand (BoT) reported that international reserves remained steady at 221.2 billion dollars as of January 26, maintaining the same level as recorded on January 19.

INDUSTRY 

Last week inflation and Consumer Confidence figures with BOT Rate Decision

STEEL SECTOR

Thailand’s steel industry faced challenges due to the influx of cheap steel imports from China. This situation is exacerbating the already slow economic recovery in the country. Tata Steel Thailand Plc (TSTH), a significant player in the industry, expresses concern over the rising imports and their impact on the local market. There was a 9.1% decrease year-on-year in steel consumption in Thailand and a significant increase in Chinese steel exports. TSTH’s fiscal performance shows a decline in sales and revenue, underscoring the broader issues facing the industry. The dumping of steel wire rods into the Thai market was partly blamed for causing a drop in capacity utilization to 28% in 2023, down from 33% in 2022, according to TSTH. The company urges the Thai government to ensure fair import prices to protect domestic manufacturers.

REAL ESTATE

In Bangkok, land prices are soaring, setting new records. A prime plot on Ploenchit Road, currently owned by the Sukosol family, is poised to be sold at over 4 million baht (USD 112,550.84) per square wah to Central Group. This trend is influenced by factors like the land and building tax, updated appraisal prices, and a shift in market strategies. Landlords are now favoring leasing or joint ventures over outright sales, leading to significant changes in high-value land transactions and the broader property market in Thailand.

TRANSPORTATION

The Vientiane (Khamsavath) Railway Station is scheduled to open its doors in April 2024, welcoming shuttle trains from Nong Khai across the border. Additionally, plans are in place to run at least two daily trains directly from Bangkok to Vientiane, Laos, offering tickets for as low as under 300 baht (USD 8.44) for the most affordable seats and including options for all three travel classes. Trial operations from Nong Khai to Vientiane (Khamsavath) are set to start in February 2024, although these will not yet be available for public use. The official launch of the regular service is anticipated in April 2024, with ticket prices ranging from 60-70 baht (USD 1.69 – 1.97) and the journey lasting about 20 minutes.

Pichet Khunatamruk, the Director-General of the Department of Rail Transportation (DRT), highlighted ongoing challenges with immigration procedures for travelers crossing the border from Thailand to Vientiane (Khamsavath) which will hold the meeting on 6th February,2024. The aim is to simplify the immigration process to require only a single stamp, either in Nong Khai or Vientiane, as currently, passengers need to be stamped at both locations. Pichet noted that extending the rail service to Vientiane (Khamsavath) is expected to significantly ease travel for both Thai and international tourists traveling by train from Bangkok to Vientiane. The existing Bangkok-Nong Khai trains, which currently make six round trips daily, will be adapted to serve the Bangkok-Vientiane (Khamsavath) route, initially offering two round trips per day with all three classes of service available.

SECTORAL UPDATE 

 Last week the SET closed at 1,384.08 points, a increase of  16.2 points ( +1.18%), trading value last Friday of  45,159.93  million baht ($US 1.281.81 million.)

The Set index is sideways in the support and has rebounded from lower support level of 1360 with next resistance levels at 1390 and 1426 in line with other regional markets as FED maintained interest rates as the market expected.

The Relative Strength Index (RSI) is currently at 48, indicating an upward trend with increasing momentum. Meanwhile, the USD/THB currency pair is trading within a range of 35.00 to 35.55.

 
 
 
 
 

For the past week the Foreign Fund inflows have helped buy the market in the beginning of February.

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