The resurgence in domestic demand and tourism helped Thailand’s industrial sentiment reach its best level in a decade in March, but high prices, sluggish global growth, and currency volatility were concerns, the Federation of Thai Industries (FTI) reported.

Industrial sentiment in Thailand reached its highest level in a decade in March 2023, boosted by a rebound in domestic demand and tourism, but high costs, slowing global growth and baht volatility were a worry.

The Thailand Industry Sentiment Index (TISI) rose to 97.8 points in March, up from 96.8 points in February and 94.1 points in January. A reading above 100 indicates optimism, while a reading below 100 indicates pessimism. The improvement was mainly driven by the tourism recovery and farmers’ greater purchasing power, as well as the government’s stimulus measures and vaccine rollout.

However, the ISI remained below the 100-point threshold that separates contraction from expansion, indicating that industrial sentiment was still weak compared to pre-pandemic levels. The FTI also warned that there were still many downside risks that could undermine the industrial recovery, such as the emergence of new virus variants, the slow pace of vaccine distribution, the high household debt burden, the political instability, and the global trade tensions.

The FTI urged the government to speed up the implementation of its economic recovery plan, especially the infrastructure projects and the digital transformation initiatives. It also called for more support for small and medium-sized enterprises (SMEs), which account for more than 80% of industrial employment and output. Moreover, it suggested that the government should promote more value-added industries and innovation to enhance Thailand’s competitiveness in the global market.

Thailand is gearing up for a tourism recovery in 2023, as it hopes to attract more foreign visitors after a slump caused by the COVID-19 pandemic. The government is forecasting 25 million to 30 million foreign tourist arrivals this year after receiving 11.15 million last year, compared to nearly 40 million in 2019.

One of the key markets that Thailand is targeting is China, which accounted for more than a quarter of its international arrivals before the outbreak. According to the federation, China’s reopening would also support Thai tourism and exports in the second half of the year, but global economic and geopolitical problems remained a risk.

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