FTI identifies 7 risks and offers 6 solutions for Thailand’s economic recovery

Speaking at the “Thailand Economic Outlook 2023” seminar hosted by Krungthep Turakij newspaper on Tuesday, FTI president Kriangkrai Thianukul said the Thai economy would face several risks next year due to the uncertain global situation, fluctuating finances and digital disruption.

“In 2023, Thailand’s industrial sector will be facing a ‘perfect storm’ fuelled by these seven risk factors, most of which are consequences of the Russia-Ukraine conflict,” he said.

The seven risk factors are:

• Inflation: Expected to continue rising next year. Thailand’s highest inflation in 17 years was recorded in August 2022 at 7.86 per cent

• Raw material shortage: Supply of products like microchips, animal feed, fertilisers, chemicals, etc, expected to drop.

• Rising energy cost: Cost of electricity rose 17 per cent this year, while the price of fuel hit a new high in eight years and the price of LPG rose 28 per cent year on year.

• Rising daily minimum wage: Daily minimum wage was raised by an average of 5 to 8 per cent nationwide.

• Weaker currency: The baht fell to its lowest in 16 years at 38 to 39 baht to the US dollar.

• Rising interest rate: The rate has been increased to 1 per cent with a tendency to rise further.

• Rising transport cost: 45 per cent hike in freight fees.

“These challenges could hinder the efficiency of our industrial sector. Meanwhile, our neighbour Vietnam has lower industrial costs and can be viewed by corporations as a better investment destination,” Kriangkrai said.

However, he said, industrial and private sectors could embrace these six solutions to gain a competitive edge globally. They are:

• Use BCG (bio, circular, green) economy as a framework for development

• Pre-empt implementation of new technology and innovation to avoid disruption.

• Enhance supply chain security to ensure uninterrupted production.

• Use renewable energy across all operations to reduce the cost of energy.

• Develop necessary skills among employees.

• Tackle climate change issues.

“The private sector may find it difficult to survive even after applying the six solutions without continued support from the government in driving economic growth in key areas,” Kriangkrai said. “We urge the authorities to ensure the continuity of economic policy implementation during the transition of power after the general election, which is scheduled in May next year. The survival of the industrial sector depends mainly on how well the public and private sectors work together for mutual goals.”