Thailand’s exports have been impacted by the uncertainties surrounding the global economy, leading to a decline in the Thai Industries Sentiment Index (TISI) for the second consecutive month to 92.5 in May.
The index’s drop was attributed to factors such as high production costs, rising policy interest rates, and concerns over the setting up of a new government in Thailand.
Key Takeaways
- Thailand’s exports have declined due to global economic uncertainties, high production costs, and rising policy interest rates.
- The Thai Industries Sentiment Index (TISI) dropped for the second consecutive month to 92.5 in May due to high production costs and rising policy interest rates.
- The private sector in Thailand wants the state to issue measures in assistance of SMEs that are impacted by the raising of the policy interest rate.
Business operators are also concerned about the incoming government’s policy on raising minimum wage, which is expected to raise costs for Thai businesses, especially small and medium enterprises. The private sector is urging the state sector to issue measures to assist SMEs impacted by the raising of the policy interest rate.
The Thailand Industry Sentiment Index (TISI) is a monthly survey conducted by the Federation of Thai Industries (FTI) to measure the confidence level of entrepreneurs in various sectors. The index ranges from 0 to 200, with a value above 100 indicating optimism and a value below 100 indicating pessimism.
According to the latest report from the FTI, the TISI dropped for the second consecutive month in May 2023, reaching 92.5 points, down from 95 points in April. This was the lowest level since November 2022, when the index was at 91.7 points.
The main factors that contributed to the decline in sentiment were:
- The domestic political uncertainty caused by the delays in forming a new coalition government after the May 14 election. The business sector was concerned about the stability and continuity of economic policies and reforms under the new administration.
- The global economic slowdown and geopolitical conflicts that affected Thailand’s export performance. The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) revised down its export growth forecast for 2023 from 3-4% to zero or -1%, citing weak demand from major markets such as China, the US and Europe.
- The high production costs faced by manufacturers, especially in terms of energy prices and loan interest rates. The FTI urged the government to implement measures to ease the burden on entrepreneurs, such as reducing electricity tariffs, lowering fuel taxes and providing soft loans.
The FTI chairman also noted that a swift establishment of the new government is needed to prevent a political vacuum and foster investor confidence.
