พิษอุทกภัย ดึงดัชนีเชื่อมั่นอุตฯ ลดลง เร่งรัฐออกมาตรการเยียวยาภาคธุรกิจImpact of Flooding Reduces Industrial Confidence Index; Urgent Government Measures Needed to Support Businesses

Mr. Kriangkrai Theeranukul, Chairman of the Federation of Thai Industries (FTI), and Mr. Pipob Choakphattana, Executive Board Member of the Federation of Thai Industries (FTI) and Vice Chairman of the Economic and Academic Division, announced that the Industrial Confidence Index for August 2024 stood at 87.7, down from 89.3 in July 2024. This decline was attributed to negative factors stemming from weakened domestic demand, particularly for durable goods such as automobiles. This is reflected in domestic car sales over a seven-month period (January-July 2024), which totaled 354,421 units, representing a contraction of 23.71 percent, particularly in pickup trucks and heavy vehicles, due to stringent lending policies from financial institutions. Additionally, purchasing power remains fragile amidst concerns regarding household debt, which is as high as 90.8 percent of GDP in the second quarter of 2024, further pressuring domestic consumption. Furthermore, businesses continue to face high production costs, including electricity, raw material prices, and financial costs, which pose obstacles to operations. The influx of cheap foreign products has also hindered the competitiveness of Thai goods due to relatively higher costs, resulting in a decline in sales.

Moreover, flooding in the northern and central regions has caused significant damage to the agricultural and industrial sectors, leading to a slowdown in the construction sector. In terms of exports, freight rates remain high and are trending upwards, particularly on routes to the United States and Europe, due to an increase in exports from China and escalating conflicts in the Middle East. Meanwhile, the Thai baht has appreciated rapidly from 36.46 baht per U.S. dollar in July 2024 to 34.92 baht per U.S. dollar in August 2024, making Thai products more expensive compared to competitors and thereby reducing competitiveness.
Nevertheless, in August, there were positive factors arising from the easing political situation, leading to increased confidence among investors and business operators, as well as expectations regarding the economic stimulus measures from the new government. Additionally, government budget disbursements and public spending will continue to stimulate the economy (the budget disbursement results for the year 2024 as of the end of August 2024 showed an 81.6 percent disbursement rate). Furthermore, the tourism sector continues to support domestic consumption.

Government initiatives to attract tourists have reflected in the number of foreign tourists in eight months (January - August 2024), which numbered 23,567,850 people, representing a growth of 31 percent (YoY), generating revenue of 1,107,985 million baht for the country.
From a survey of 1,330 operators encompassing 46 industrial groups of the Federation of Thai Industries (FTI) in August 2024, it was found that growing concerns among operators include global economic conditions at 67.5 percent, domestic economic conditions at 65.2 percent, oil prices at 61.3 percent, and exchange rates (from the exporters’ perspective) with the exchange rate against the U.S. dollar at 40.6 percent, respectively. Meanwhile, concerns have decreased regarding domestic political situations at 56.0 percent and interest rates at 45.8 percent, respectively.
The index forecasting for the next three months stands at 93.9, down from 95.2 in July 2024, with operators still worried about the impact of the minimum wage increase to 400 baht per day on production costs, particularly for SMEs and labor-intensive industries. Additionally, there is an upward trend in non-performing loans (NPLs), ongoing geopolitical issues remain persistent and severe. However, there are supportive factors from the 10,000 baht economic stimulus program, and tourism activity is expected to increase significantly in the last quarter of 2024.

Recommendations for the Government:

1. Expedite the announcement and clarification of economic stimulus measures for the remainder of 2024, such as measures to increase consumer purchasing power.
2. Reduce electricity usage guarantee amounts to enhance liquidity in the industrial sector and delay requests for increased electricity usage guarantees should average electricity costs rise, as well as review and lower the ceiling for electricity usage guarantee amounts to be more commensurate.
3. Revise the Anti-Dumping and Countervailing Duties Act, B.E. 2542 to ensure effective enforcement of antidumping (AD), countervailing measures (CVD), safeguards against increased imports (SG), and countermeasures against circumvention (AC), while reducing the investigation consideration period for more effective market dumping problem resolution.
4. Implement measures to support businesses affected by flooding, such as corporate tax exemptions, extensions for tax filings, exemptions on import duties for machinery, and infrastructure investments for water management to address long-term flooding issues.
5. Request that the government adhere to the resolutions of the subcommittee reviewing minimum wage rates by province in determining minimum wage rates and consider current economic conditions and impacting factors.

The FTI has compiled data from the industrial confidence index survey and relevant economic and industry indicators from various agencies for the past three years, creating a dashboard published on the Industry Data Space (iDS) website of the Federation of Thai Industries (FTI) to facilitate access to useful business data for entrepreneurs and the general public. This information can be accessed at https://fti.or.th/DataCenter/Industry-data-space
FTI aims to “Strengthen Thai Industries for Stronger Thailand”

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Published by the Corporate Communications Department, Federation of Thai Industries (Tel. 0-2345-1013)
Data Prepared by the Economic and Academic Division, Federation of Thai Industries (Tel. 0-2345-1111)