สินค้าต่างชาติหั่นส่วนแบ่งตลาด ฉุดดัชนีเชื่อมั่นอุตฯ ลง เร่งขยายผลเจรจา FTA เพิ่มแต้มต่อการค้าForeign Products Slash Market Share, Dragging Industry Confidence Index Down; Accelerating FTA Negotiations to Enhance Trade Advantage

Mr. Kriengsak Thiennukul, Chairman of the Federation of Thai Industries, along with Mr. Apichit Prasoprat, Vice Chairman of the Federation of Thai Industries, and Mr. Pipob Chokwatana, 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 December 2024 stood at 90.1, a decrease from 91.4 in November 2024. This decline was attributed to a slowdown in industrial production following last month's surge, as well as fewer working days and extended holidays during the New Year festival in December. Additionally, the ongoing floods and unstable weather conditions in the southern region have not yet stabilized, leading to a slowdown in economic activities. Rising costs of agricultural raw materials due to the flooding in the northern and northeastern regions in the previous month have also impacted the agricultural processing industry. Furthermore, domestic demand has slowed down, evidenced by a 31.34% contraction in sales in the automotive industry in November 2024. Financial institutions have been cautious in approving loans, and sales of construction materials have decreased due to the slowdown in the real estate sector, particularly in residential properties. Meanwhile, the energy sector has also seen a decline due to decreased orders, and domestic purchasing power, especially in regional areas, remains fragile due to household debt affecting citizens' spending capabilities. Producers are facing increased competition from Chinese products, which are capturing market share both domestically and in the ASEAN region, thereby diminishing the competitiveness of Thai products.

However, in December, there were positive factors as businesses organized promotional activities during the New Year festival to stimulate spending in food and beverage products, fashion items, electrical appliances, furniture, and home decorations, among others. Additionally, the successful conclusion of the Thailand-EFTA Free Trade Agreement (FTA) was noted, with businesses utilizing FTA privileges in the period from January to September 2024 amounting to 85.58%, an increase of 2.11% year-on-year. This is beneficial for the export sector, as the electronic goods sector continues to grow in line with increasing global market demand and is currently in an upward trend. Moreover, tourism is also expanding, with both domestic and international tourists increasing, partly due to government tourism promotion measures such as the exemption of TM 6 cards at land border checkpoints, enhancements to ease the travel process for tourists on the Web Portal: Entry Thailand, and an increase in flight frequency.

The survey of 1,372 operators covering 46 industrial sectors under the Federation of Thai Industries (FTI) in December 2024 revealed that factors causing increased concern among operators included domestic economic conditions (56.3%), global economic conditions (52.4%), and the political situation in the country (40.1%). Meanwhile, factors causing decreased concern included oil prices (37.2%), exchange rates (exporters' perspective) with the reference rate of the Thai Baht against the US Dollar (36.5%), and loan interest rates (29.4%).

Conversely, the index for the next three months is projected to be at 95.5, down from 96.7 in November 2024. Key concerns among operators include the adjustment of the minimum wage, which has increased by 7 to 55 Baht per day (an average increase of 2.9%), significantly impacting the labor costs for operators, especially SMEs. The risks associated with trade barrier measures and the potential increase in taxes by the United States under the Trump 2.0 policy could adversely affect the export sector and overall economic growth.

Nonetheless, there are supportive factors expected from the tax relief measures of Easy E-Receipt 2.0 and the Phase 2 cash distribution program of 10,000 Baht for the elderly aged 60 and above, which are anticipated to stimulate purchasing power during the first quarter of 2025. Additionally, the trend of increased crude oil production by the United States indicates that global oil prices may trend downward.

Recommendations for the Government 

1. Recommend the government establish a War Room to prepare strategies to handle US trade policies to mitigate impacts on Thailand's export sector and also create new opportunities for market expansion in the US. 
2. Call on the government to provide relief measures for SMEs affected by the adjustment of the minimum wage that took effect on January 1, 2025. 
3. Recommend the government introduce measures to promote energy conservation and enhance the efficiency of machinery and equipment in industrial factories to reduce production costs, as well as promote the use of renewable energy in the industrial sector.
4. Accelerate the positive outcomes from the Thailand-EFTA FTA negotiations to progress towards the Thailand-European Union FTA negotiations to broaden trade opportunities.

The FTI has compiled data from the Industrial Confidence Index survey and economic and industrial indicators from various agencies over the past 3 years, creating a dashboard published on the website of the Industry Data Space (iDS) of the FTI to facilitate access to useful business data for operators and the general public. This information can be accessed at https://fti.or.th/ids

The FTI aims to “Strengthen Thai Industries for a Stronger Thailand.”

..................................................
Published by the Corporate Communications Department, Federation of Thai Industries (Tel. 0-2345-1051)
Prepared by the Economic and Academic Division, Federation of Thai Industries (Tel. 0-2345-1111)