泰国工业展望-77页-WN7.pdf
2023-2025THAILANDINDUSTRY OUTLOOKKrungsri ResearchJanuary 2023The Thailand Industry Outlook over the next 3 years(2023-2025)covers a range of factors that will haveimpacts on industries.Those factors include challenges and opportunities to represent the attractiveness ofeach industry that relies on the macroeconomic environment and sector-specific factors.2Krungsri Research2023-2025 THAILAND INDUSTRY OUTLOOKThe world economy,2023-2025:The major economies will slow,while trends towardsdeglobalization are likely to gather strength.Economic growth is expected to slow over the next three years,dropping from 2022s forecast of3.2%to 2.7%in 2023 and then rebounding to around 3.0%in each of 2024 and 2025.Although thedrag placed on global growth by the COVID-19 pandemic is now lifting,this has been replaced by ahost of other factors,most notably the war in Ukraine and the subsequent imposition of sanctions onRussia and the accompanying energy crunch.The world economy is also battling against headwindsgenerated by the economic slowdown in China and the deepening and widening gulf separatingChina from the US.The polarization of global trade that the latter is driving is then havingconsequencesforsupplychainsworldwide,andthismaywellacceleratetrendstowardsdeglobalization.Beyond this,this years spike in energy costs and the surge in inflation that the exitfrom the pandemic helped to usher in has pushed central banks into a dramatically more hawkishstance through 2022.In the absence of a central bank pivot,this will likely continue into 2023 andthe extended pressure resulting from rapid rate hikes will multiply stresses in financial markets andadd dramatically to the cost of borrowing,which will then feed through into a negative outlook forboth private-and public-sector debt.Overall,the global economy is thus at risk of a severeslowdown in 2023,though the softening of demand would also help to dampen what are currentlyintense inflationary fires.This might then force policy makers to shift their stance as they look tohead off a protracted slump,and thus a slowdown may help to open the way to a relaxation ofmonetary tightening in the major economies.The Macroeconomic environmentsFigure 1:GDP Growth(%)-10-505102016201720182019202020212022E2023F2024F2025FChinaWorldUSEurozoneJapanSource:IMF World Economic Outlook(Oct 2022)The US economy is expected to remain sluggish over 2023-2025,with growth slowing from 1.6%in2022 to just 1.0%in 2023 and then clawing its way back to 1.2%and 1.8%in 2024 and 2025,respectively.Alongside this,inflation has run north of 8.0%over the second and third quarters of2022 and although it will soften,inflation will remain above the 2.0%target for the next 2 years.Assuch,the Fed will likely continue with its current aggressive rate rises.From a start of just 0-0.25%atthe beginning of 2022,federal funds rate hit 4.25-4.5%range by the end of the 2022 and willcontinue on their upward track to 5.0-5.25%range by the end of 2023.This will necessarily havesignificant consequences for consumption and investment and,over 2023 and 2024,the employmentfigures.Through 2025,growth will remain somewhat underwhelming.The Fed currently sees ratesdropping to 4.1%in 2024 and 3.1%in 2025 and this should help to breathe life back into theeconomy.Nevertheless,the policy rate will remain elevated relative to long-term rates of 2.5%andthe maintenance of tight monetary policy will drag on growth.The US is thus now exposed toelevated levels of risk as a result of the scale and pace of these rate hikes,a situation that is thenbeing worsened by intense geopolitical tensions and the polarization of the global economy.The Eurozone is entering a difficult and protracted energy crisis,and over 2023 to 2025,this willplay a part in restraining average annual growth to just 1.4%,which would be a sharp turnaround on2022s expansion of 3.1%.This is a direct consequence of the Russia-Ukraine war,and in particular thecritical shortfall in energy supplies and the need to hike rates to combat inflation.This is then holdingback business investment and,as the cost of living has exploded and the burden of meeting debtrepayments has worsened,household consumption has softened.Over the longer term,there is alsoa real risk that the energy crisis may significantly erode the competitiveness of Eurozone industries.The European Central Bank(ECB)is also expected to continue with its policy of rate hikes,with theselikely reaching 2.25%by the end of 2023.Unfortunately,tightening monetary policy into the onset ofan economic slowdown will pile on risk for the more fragile members of the Eurozone,most notablyGreece,Italy,and Spain,although more positively,the existence of the Transmission ProtectionInstrument(TPI)will allow the ECB to support bond markets and this should help the continent avoida rerun of the 2010 Eurozone crisis.Structural problems will continue to hold back the Japanese economy and following a 1.7%expansionin 2022,growth rates will slip to an average of just 1.3%over 2023-2025.Now that the country has(as of October 2022)fully reopened to overseas arrivals,a major driver of growth over the immediatefuture will be recovery in the tourism sector.However,overall exports will struggle in the face of theglobal slowdown,although the easing of supply bottlenecks in the automobile sector will help boostexports there.The recent slump in the value of the yen will also act as a stimulus in overseas markets.While the labor market has strengthened and a decision has recently been made that by the end ofthis year,the minimum wage will be hiked by 3.3%,the highest rate in history,the prevalence of adeflationary mindset means that consumers remain wary about their spending and as such,householdconsumption is depressed.Against this backdrop,officials continue to believe that recovery willremain weak and inflation will undershoot the central banks target.Given this,the Bank of Japan isexpected to keep monetary policy loose.Thus,interest rates will remain negative and bond yieldcurve controls will stay in place until inflation is brought up to the long-term target of 2.0%.A broad constellation of factors will keep Chinas rate of growth below its pre-COVID-19 level,andso although growth will accelerate from 2022s 3.2%to an annual average of 4.5%over 2023-2025,this will still be significantly below the pre-pandemic average of 6-7%.Among these factors will be:the slowdown in global trade;earlier moves to suppress excessive profit taking and to weakenmonopolies;the deep troubles that continue to rock the real estate sector;and longer-termdemographic problems as China transitions to an aging society.Over the next 3 years,Chinesegrowth will largely be driven by the relaxation of pandemic controls,recovery in the labor market,government spending on infrastructure construction,government policy that aims to make Chinamore self-sufficient by deepening and extending domestic supply chains and their connections acrossChinese industry,and fiscal and monetary policy that will be targeted at the groups most affected bythe pandemic and those singled out by the authorities for additional growth-related assistance.However,risks are rising rapidly from the worsening of China-Taiwan and China-US tensions,and thismay lead to a much more clearly defined global polarization between the two camps.In addition toweakening global supply chains,especially those connected to technology,this would also addconsiderably to the risks faced both by the world economy and by financial markets.3Krungsri Research4Krungsri ResearchStructural changes to the world economy long-term impacts for business and industryThe world economy is increasingly dependent on the service sector,and this now has a major roleto play globally in generating income and securing employment.Beyond this,services also amplifytheefficiencyofmanufacturingindustries,forexamplethroughthoseconnectedtofinance,distribution,and transport.In developed economies such as the US and the UK,the service sectorcontributes an average of around 75%of gross domestic product(GDP)and provides over 70%ofjobs.In these countries,modern services such as finance,IT,and intellectual property are majordrivers heavily dependent on access to a highly skilled workforce and the application of moderntechnology,to generate considerable added-value to the overall service sector.By contrast anddespite steadily increasing in importance,as of 2021,the service sector contributed 56.7%of ThaiGDP(Figure 2)and provided 52%of jobs,leaving Thailand some distance behind the advancedeconomies.This is partly because the country is still dependent on traditional services such as tourism(the source of 17.8%of GDP in 2019),wholesale and retail trade,and hotels and restaurants.Bycontrast,high value-added modern services provide just 14.0%of Thai GDP(source:Bank ofThailand),and these are concentrated in finance and telecommunications.Source:World Bank,Office of the National Economic and Social Development Council(NESDC)4550556065199720002003200620092012201520182021Figure 2:Share of service sector in GDPThailandWorld%of GDPThe COVID-19 pandemic cast a harsh and revealing light on the fragility of Thailands traditional services,and it is imperative that Thailand now makes a determined effort to transition to a greater reliance onmodern services.This will entail a much more extended use of technology to invigorate the businessecosystem1/,and to channel growth into other services,such as medicine and healthcare,logistics,and theprovision of digital content.In addition to generating greater added-value,this will also help to pave theway to the servicification of(and hence greater product differentiation within)industrial manufacturing(e.g.,through the use of artificial intelligence and big data in design and consultancy),in the processhelping businesses better respond to global demand.The necessity of moving in this direction isunderlined by data from 2020 that show that global imports of services are concentrated heavily in themodern service segment;research and development,professional consultancy and management services,and technology and IT services accounted for 28.2%of all service imports globally.This was followed inimportance by transportation(20.5%),tourism(11.6%),intellectual property(9.6%),telecommunications,computing,and information services(8.6%),finance(5.9%),insurance and pensions(4.1%),and personal,cultural and recreational services(1.7%).Moreover,broadening the range of service exports will help toreduce the economys exposure to the risk of over reliance on any one industryHowever,increasing the contribution of services to Thai GDP is likely to be a slow and drawn-out processbecause at present:(i)The Thai workforce is relatively unskilled with regard to technology and so there isonly limited pressure to innovate,while the necessary ecosystem of research and development,incentives,qualitative data,and regulatory,technological,and financial infrastructure is largely absent;and(ii)TheThai regulatory environment is relatively restrictive with regard to foreign investment in the servicesector,especially in comparison to the developed economies.Indeed,the OECDs 2021 Services TradeRestrictiveness Index placed Thailand 49 out of the 50 countries assessed,indicating that the Thai servicesector is operating with more restrictions relative to a large number of countries,and this is then addingto the barriers placed in the way of inflows of investment and technology.As such,domestic innovationand the development of new technology is restricted,and this represents a challenge for thegovernment,businesses and industries to move forwards a service-based economy,an outcome thatwould help to set Thailand on the path to long-term sustainable growth.1/Trade Policy and Strategy Office20212020The global economy has been increasingly affected by the imposition of barriers to trade asnational governments look to protect domestic markets.This process has been accelerated by theCOVID-19 pandemic and at the start of the year,the outbreak of war in Ukraine,the prolongation ofwhich is adding to the pressure to keep these barriers in place.However,trade tensions predatethese more recent developments;for example,the worsening trade relations between the US andChina that was seen over the years prior to the pandemic.The World Trade Organization(WTO)hassaid that at present,member states have in place 148 COVID-19-related barriers to trade.82%ofthese restrict exports,and one result of this was a slowdown in the manufacture and globaldistribution of COVID vaccines and other medical supplies and equipment.In addition,43 members ofthe WTO have placed a total of 71 sanctions on Russia,and 27 countries,including China,Hungary,Argentina,and Indonesia,have export restrictions in place that are targeted at maintaining domesticfood security.Alongside this,environmental regulations are increasingly operating as barriers totrade,especially those that aim to reduce the release of greenhouse gases(i.e.,carbon barriers totrade).One example of this is the EUs European Green Deal.As part of this,the EU has introducedthe Carbon Border Adjustment Mechanism(CBAM).When this is fully enforced in 2027,a carbon taxwill be placed on specified imports to the EU,and this will affect Thai exports of steel,aluminum,andplastics.Likewise,the US Clean Competition Act(CCA)will place a carbon tax on carbon-intensiveproducts such as fossil fuels,refined oil products,petrochemicals,fertilizers,iron and steel goods,and coal.The Thai public and private sectors will thus need to act quickly to develop technologicalsolutions that will help to bring the carbon intensity of exports down to acceptable levels.Stakeholders should also use the BCG model to put the economy securely on the path to net zeroemissions,which would then help to ensure that Thai industry travels in the same direction as itsglobal peers.New technology is taking on an ever-more central place in the structural reform of industry ascompanies look to maintain and extend their competitiveness.Within the new normal,digitaltechnology is thus becoming a core driver of the creation of added-value in the manufacturing andservice sectors.This is then allowing for more sustainable growth that is built on secure global supplychains and that responds to growing interest in environmental protection,especially with regard toloweringenergyconsumption.Withinthiscontext,technologythatwillassumeaparticularlyimportant role over the next three years will include the following.The Internet of Things(IoT):IoT will play a role gathering data from sensors in everything fromeveryday gadgets to smart factory machines,though this will be especially important in industriesinvolved in the production of electronics,auto parts,electrical appliances,and medical equipment.In the service sector,IoT applications are being used in hotels,hospitals,and logistics operations.The increasing spread of 5G service
