TH About Deloitte Ebr 3Q2023 EN

Thailand’s Economic Outlook
3Q2023
Clients & Markets, September 2023
Global Economy 3Q2023
The 2023 Global economy remains feeble by historical
standards. The increase in central bank policy rates to
European Union
combat inflation is still weighing on economic growth.
Global headline inflation is expected to fall from 8.7% China Unit: %
in 2022 to 6.8% in 2023 and 5.2% in 2024. 3.7
1.0 1.7 5.2 4.5 Asia1
2023
3.0
2022 2023F 2024F 5.3%
United States 2022E 2023F 2024F
2.1 1.8
1.0 Japan
2022 2023F 2024F 1.4

1.1 1.0
2022 2023F2024F
World
3.5 India ASEAN
3.0 3.0
7.2 5.5
6.1 6.3 4.6 4.5
2022 2023F 2024F
Source: Deloitte Analysis, IMF WEO July 2023

Note:
1 Asia refers to Emerging and Developing Asia
2022 2023F 2024F
2 ASEAN refers to ASEAN-5; Indonesia, Malaysia, Philippines, Singapore, Thailand 2022 2023F 2024F
© 2023 Deloitte Touche Tohmatsu Jaiyos Co., Ltd. Economic Outlook Report 3Q2023 3
Key Takeaways and Watchlist in 2023
US EU Japan China
Key Takeaway Key Takeaway Key Takeaway Key Takeaway
• Retail sales continued to grow rapidly in July. • Declined core inflation in August • Accelerating household income • PBOC’s cut in foreign currency reserve required
• Housing surged in July. • Growth in shipments of automobiles ratio for commercial banks to reduce downward
• US Treasury yields rose sharply after the • Recovering inbound tourism pressure on renminbi value
Federal Reserve hinted at further rate hikes. • High inflation (5.3% in Aug 23)
• Sharp rise in wages in Germany • Higher than target inflation (3.3% in Aug 23) • Suffered deflation in July for the first time since
• Significant increase in defaults on junk • Weak euro • The lowest value of yen since Nov 22 early 2021
(high yield) corporate loans • Weakening credit markets • Weak domestic demand • Private equity and venture capital funds ban from
US in investing in certain Chinese technologies
• Weak trade to the rest of the world
Watchlist Watchlist Watchlist
Watchlist
FED’s direction on interest rate: either Less certainty on ECB to further raise Impact of rising inflation on household
tightening or pausing the increase interest rate due to weak euro financial stability China’s central bank cut a key interest rate,
signaling a shift in monetary policy
Abandoning trade liberalization Bank of Japan’s signal to shift, tightening
EU’s energy trade and resource amidst the the monetary policy. Fragile property market
war in Ukraine
Southeast Asia overview and opportunities
Strong internal and external drivers are increasing the region's importance as a manufacturing and trading hub for both East and
West developed nations.
2022 Population and GDP Per Capita 1 2022 GDP and GDP Growth (2022 – 27) 1 Key Highlights
SEA SEA Remains on a growth trajectory with 5-year CAGR of

677 M | 5.3K
7.7%, impacted by softening export demand from
GDP (US$B) 3,626
global economic slowdown
LA Growth Rate % (2022-27) 7.7%
7 M | 2.2K
PH Inflation to remain moderate at ~4% in 2023 (peaked
VN
116 M | 3.5K at 5% in 2022) following higher input cost and local
98 M | 4.1K
MM GDP Growth currency depreciation
54 M | 1.1K KH (US$ B) (%)
17 M | 1.8K 10.7 11.6
TH
72 M | 6.9K US-China trade tensions driving investment flow from
BN US-SEA-TW/Japan semiconductor value chain
7.8 7.5
0.4 M | 37K
SG
6 M | 83K 1,319 4.6 Growing middle-income population with higher
4.9 education level driving demand for quality goods
MY and services
34 M | 12K ID
272 M | 4.8K 495
406 404 467 407
Diverse levels of economic developments, ranging
GEOGRAPHY from highly developed to developing markets, that are
Population (M) | GDP / Capital (US$ ‘000) ID MY PH SG TH VN interdependent and complementary
Sources: Deloitte Analysis, (1) EIU, ADB
Inflationary pressures alleviated in several areas; however, central banks are
still increasing interest rates to stifle the consequences.
Inflation Rate Policy Rate

Developed countries Developed countries
12
6
US
10 5
UK
8 UK 4
Euro Area
6 3
Euro Area
2
4 Japan
1
2 US
0
0 Japan
-1
01/01/2022 01/07/2022 01/01/2023 01/07/2023 01/01/2022 01/07/2022 01/01/2023 01/07/2023 01/01/2024
Developing countries & Emerging markets Developing countries & Emerging markets
8 6
Indonesia
6 5
4 China
4 Indonesia
3 South Korea
2 South Korea
2 Thailand
Thailand
0 1
01/01/2022 01/07/2022 01/01/2023 China
01/07/2023
-2 0
01/01/2022 01/07/2022 01/01/2023 01/07/2023 01/01/2024
Source: Deloitte Analysis, NESDC
El Niño – onslaught on supply chains and inflation
Extreme weather, floods, heatwaves, water scarcity and wildfires will brew up potent new economic storm.
El Nino, fears of fires and drought Why does it matter?

• Happens when the surface temperature of the
• Lower crop yields such as rice and coffee beans,
eastern and central Pacific Ocean is at least
resulting in higher cost of food and thereby increase
0.5°C warmer than average, weakening or
the cost-of-living.
reversing the flow of the trade winds
• Dangerous early summer heat waves i.e. in Tokyo,
• July 2023 was earth’s hottest month ever, 1.8 °C
Beijing, India, and Vietnam
above than average.
• The last strongest one to date was in 2016, at
about 1.1 °C higher than the pre-industrial period
• Thailand's domestic milled rice prices jumped nearly 20%

in the early of August 2023 to 21,000 baht ($597) per
tonne, up from around 17,000 baht.
• Estimated 53 billion THB loss from drought and 48 billion
THB damage in agricultural sector1
• High chance of lower export level than expected in food
and agricultural products
Source: Deloitte Analysis, Reuters, NASA, JSCCIB1, Thansettakij
Lower crop yields from El Nino and India's limit on rice exports have increased food price.
Higher electricity demand has also raised energy prices.
Commodities Price Index (2010=100) Commodities Price
Unit: US dollars
180 600
Rice, Thai 5% ($/mt)

150 500
Food
120 Agriculture 400
Metals & Minerals
Wheat, US HRW ($/mt)
Energy
90 300
Raw Materials
60 200
30 100
Crude oil, Dubai ($/bbl)
Natural gas, US ($/mmbtu)

0 0
01/2019 01/20 01/21 01/22 01/23 01/2024 01/2019 01/20 01/21 01/22 01/23 01/2024
Source: Deloitte Analysis, World Bank
China’s property crisis continues. Evergrande filed for chapter 15 bankruptcy protection
in New York, and Country Garden’s risk of default are deepening the crisis.
Growth Rates of Investment in Real Estate Development, For Jan-Jul 2023, the investment in real estate development
and Funds for Investment This Year for Real Estate stood at 6.77 billion yuan (-8.5% YoY), of which, the investment
Development Enterprises in residential buildings was 5.14 billion yuan (-7.6% YoY), and
office buildings indicated as 0.26 billion yuan (-8.1%).
Unit: %
Investment in Real Estate Development For Jan-Jul 2023, the funds for investment for real estate were
Funds for Investment (of the year) 7.8 billion yuan (-11.2%), of which the utilized foreign
0
for Real Estate Development Enterprises investment saw the most plummeted.
-2
-4 -5.4 Funds for Investment This Year for
-5.7 -5.8 -6.2
-6 -6.6 Real Estate Development Enterprises - Breakdown
-7.4 -7.9
-6.4 -8.5 Unit: 100 million yuan
-8 -8.8 -7.2
-10.0 -9.0
-10 -9.8 -11.2
13,950 (18%) 30 (0%)
-12 27,377 (35%) 23,916 (31%) 78,217
9,732 (12%)
-14 -15.2 3,212 (4%)
-24.7
-25.3 -25.0
-25.9 Deposits and advance receipts (-3.8% YoY) Domestic loans (-11.5% YoY)
-26
Self-raised funds (-23% YoY) Foreign investment (-43% YoY)
Jan-May 23
Jan-Aug 22
Jan-Jun 22
Jan-July 22
Jan-Nov 22
Jan-Dec 22
Jan-July 23
Jan-Oct 22
Jan-Mar 23
Jan-Apr 23
Jan-Sep 22
Jan-Feb 23
Jan-Jun 23
Individual mortgage (-1.0% YoY) Others
Source: Deloitte Analysis, National Bureau of Statistics of China
Thai Economy 3Q2023
2023 GDP growth rate is likely to be lower than expected, due to low tourism spending and China's tourist arrivals missing the target.
Real GDP Growth (%YoY)
5 World
4.2 4.2 Bank’s
3.9
4 Forecast
3 2.6
2.3 NESDC’s
2.5 - 3.0 Forecast Key Factors to be Monitored
2 1.6 2.6
1 • Expanding private consumption

• Recovering tourism sector
0
2017 2018 2019 2020 2021 2022 2023F
-1
• High household debt and inflation
-2
• Rising policy rate results in higher
-3 cost of loan
• Impacts from Russia-Ukraine war
-4 • Slow growth among other regions
Thailand’s GDP Quarterly Performance
-5 • 1Q2023 = 2.6%
• 2Q2023 = 1.8%
-6
• 1H2023 = 2.2%
-6.1
-7
Source: Deloitte Analysis, Bank of Thailand, World Bank (as of June 2023), NESDC
Thailand’s economic recovery is mainly attributed to increasing tourism activities and private consumption, driven by spending of
medium and high-income consumers. However, 2023 merchandise exports are projected to contract, weighed by subdued Chinese
demand, global electronic cycle, and a severe El Niño episode.
2022 2023F
6.3 6.8
5.0 5.1
4.1
2.6 2.8
1.5 2.0
0.0
-1.1
-1.8
-3.1
GDP growth
-4.9
Private Private Public Exports of Goods Imports of Goods

Public Investment
Consumption Investment Consumption and Services and Services
Source: Deloitte Analysis, NESDC
Tourism in Thailand is recovering from increased tourist arrivals.
Foreign tourist arrivals Forecast Foreign tourist arrivals by Month Top 5 Tourist Arrivals
to TH by Nationality
Unit: Million Persons Unit: Million Persons
2.5 Million Unit: Person
2.5 (as of July 23)
2.0
39.9
Malaysia
35.5 1.5
2.5M
29.0 1.0
0.5 China
13.6
0.0 1.9M
11.2 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23
6.7 South Korea
15.4 Top 5 provinces received income from foreign visitors
0.4
913K
As of July 23
2019 2020 2021 2022 2023F 2024F 2.4%
Bangkok India
Phuket 11.1% 2.4% 890K
Forecast 6.3%
Chon Buri 48.0%
Actual (as of July 23) 645 billion
Surat Thani THB Russia
Chiang Mai 29.8% 857K
Source: Deloitte Analysis, Bank of Thailand, MOTS, TAT, NESDC
Others
Thailand’s Tourism
Thailand’s Tourism Situation
Situation
Occupancy rate increased in July due to school break in some regions/countries. However,
about 88% of surveyed hotels would have lack of workforce for the upcoming high season
Expected solution to solve on hotels’ lack of workforce during
which majority would hire casual/temporary workforce for the period.
high season
Unit: % of 91 respondents (more than one answer is allowed)
Occupancy Rate Forecasted
(as of July 2023)
65.8
70
62.6 65.6
Hire more temporary workforce 79
60 58.9 57.5
51.4 Develop current workforce’s skills and roles 73
50 45.1 47.5 54.4
Apply technology or automation more 35
36.4 45.5
40 43.9
Increase salary/ Overtime to attract workforce 28
30 29.8 32.3 32.6 Increase permanent workforce 20
20 18.0 Lower quality on some services 5

15.5
9.6 Provide more fringe benefits 3
10 6.1
Decline some customer 1
0
Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23
Source: Deloitte Analysis, Bank of Thailand
Inflation eases in Thailand.
Headline inflation saw modest from August 2022’s high base and government’s subsidies on cost-of-living. However, global impact and
current high food prices are creating challenges in lowering Thailand’s inflation rate.
Headline Inflation (%) Inflation forecast (%)
7.5
6.08 Headline inflation Forecast
6.0
Core inflation
4.5
3.0 Target range

1.70
1.5 1.20
0.0
-0.80
-1.5
2020 2021 2022F 2023F
Inflation in August 23 = 0.88% Source: Bank of Thailand
Easing inflation contributed by Watchlist

• Recovering domestic demand from tourism sector
• Direction of government economic policies
• High base from last year
• Global food and energy prices
• Cost-of-living subsidies from government
• Global economies and financial situations
Source: Deloitte Analysis, Bank of Thailand, NESDC, TPSO, Fiscal Policy Office
Most consumption levels saw improvements, especially in services, due to a recovering tourism
sector. However, declining passenger car sales yielded a lower durable index.
Still, lower-than-expected economic recovery, political uncertainty in June-July 2023, and increase in fuel prices
resulted in lower business sentiment in July 2023.
Private Consumption Index (Seasonally Adjusted) Business Sentiment Index
220 58
200 56
Services Index
180
54
53.3
160 Private Consumption
52
Index
140
Non-durables Index 50
120
Durables Index
48
100 Semi-durables Index
46
80
0 0
01/01/2019 01/01/2020 01/01/2021 01/01/2022 01/01/2023 01/01/2024 01/07/2022 01/10/2022 01/01/2023 01/04/2023 01/07/2023 01/10/2023
Source: Deloitte Analysis, Bank of Thailand, TPSO
Thai Industries Sentiment Index in July 2023 fell to a 10-month low.
Positive Factors
Thai Industries Sentiment Index Rise in tourism yields to hold up domestic
consumption and spending
108 Negative Factors

106
Deceleration in manufacturing and demand
104 of goods
102 100.2
100 3-month Forecast
Household debt burden and high living expenses
98
96
Increasing interest rate
94 92.3
92 Present
Global fragility due to decreased market demand
90
88 Lower expansion of Chinese economy than expected
86
0 3-month Forecast watchlist

May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23
Increasing production costs trend
High uncertainty of global economy

Source: Deloitte Analysis, FTI
Thai Industries Sentiment Index by Performance
Compared to last month, automotive and automotive parts saw had a higher sentiment index whilst petrochemical, glass, and electronics
saw decline in sentiment.
Declined TISI Increased TISI

Tightrope Rising Star
• Petroleum refinery • Packaging • Automotive parts • Digital
• Air conditioner • Rubber • Automotive • Medical equipment

Declined manufacturer Increased
• Electricity • Aluminum • Food & Beverage
TISI but • Cosmetics TISI and
• Renewable energy above 100 • Pharmaceutical above 100
100
• Textile • Machine • Plastic Red Flag • Cement • Furniture Mastering

• Apparel • Agricultural machine • Palm oil • Shoes • Herb
• Jewelry • Electronics • Paper • Metal • Creative craft
• Leather • Sugar • Roof and equipment • Environmental

management
• Glass • Gas Declined • Granite and marble Increased
• Biotechnology
• Ceramic • Petrochemical TISI and • Wood and plywood TISI but
below 100 • Boat maintenance below 100
• Sawmill • Chemical • Dairy supplement
• Metal casting
Note: As of July 2023

Source: Deloitte Analysis, FTI
Policy Rate
The Monetary Policy Committee (MPC) unanimously voted to raise the policy rate by 0.25 percentage point,
from 2.00 to 2.25 percent.
Policy Rate
MPC’s Perspectives:
3.5
• Thai economy overall continued to recover.
Forecast
4Q2023
External demand softened somewhat in the
3.0 near term, but is expected to gradually
recover looking ahead.
2.50
2.5 Present or • A higher interest rate would add buffer to
2.25 2.25 monetary policy and the financial system,
2.0 2.00 enhancing the capability to respond to
1.75 negative shocks.
1.5 • The present context of sustained economic

1.25 expansion should provide an opportunity for
1.25 1.00 building up policy space in readiness for
1.0 uncertainties looking forward.
0.75
0.5
0.50
0.0
2010 2012 2014 2016 2018 2020 2022 2024
Source: Deloitte Analysis, Bank of Thailand’s Monetary Policy Committee’s Decision 4/2023
Exchange Rate
Thai baht saw more volatile in response to FED’s interest rate increase and Yuan’s weakening value.
Exchange Rate (Unit: THB/USD) The Change of Currencies against USD (%)
Thailand -2.3
5.5
2022 35.05 /USD 2023F 34.01 /USD 6.6
38 China 6.7
7.0
37 Japan 11.0
Value as of
11st Sep 2023 Singapore -2.4 1.9
36
0.2
35.50 South Korea 6.3
35
India 4.2
34 1.3
3.2
Malaysia 6.6
33
Aug of 2022 to Aug of 2023 (YoY)
32
Jan of 2023 to Aug of 2023 (YTD)
31
30 Factors influencing Thai baht
29 Appreciation Depreciation
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 • Expected recovery • FED’s more increases in interest rate in 2023
from tourism • Impact from geopolitical conflicts
Source: Deloitte Analysis, Bank of Thailand, TDRI EIS, Fiscal Policy Office
Household debt remains high at 86.3% to GDP. (90.6% at adjusted rate)
Non-productive loan such as Other Personal Consumption significantly contributed to total household debt.
Surge in delinquent auto loans is a cause for concern.
Trillion THB %
Household Debt - 2Q2023
20 100
90.8 90.2 88.3 87.0 Overall Value NPL
80.3
77.7 78.4 89.3 87.1
86.3 80 16 1.03
15
Household Debt to GDP
Trillion THB Trillion THB
Real Estate
60
Vehicle purchase
10 or Hire purchase
Education
40
Other personal
consumption
5 Auto Loan – 2Q2023
Own Business
20
Others
Overall Value NPL
0 0
2.6 196,000
1Q2018
1Q2020
1Q2022
1Q2023
1Q2019
1Q2021
2Q2022
3Q2022
4Q2022
Trillion THB Million THB
Source: Deloitte Analysis, TDRI EIS, PIER, National Credit Bureau, Bank of Thailand, Bangkok BizNews
10 Key Industrial Exports for 6M2023
Majority of industrial exports plummeted during 6M2023, except electronic equipment, automobile-equipment-and-parts,
and electrical appliances.
6M2023 Export % Change (YoY)
Value (mUSD)
Jun-23 Jan-Jun 23
0.2
22,231 Electric Equipment* 1.5
Automobile, 11.4
19,191
equipment, and parts 4.9
15,130 Electrical appliance 3.2
0.7
7,512 Jewelry and Ornaments -17.3
-14.1
6,783 Rubber products -6.9
-6.5
-21.5
6,496 Plastic material -22.3
5,385 Construction materials -16.5

-16.2
4,232 Machinery and equipment 0.1
-6.1 *Note: Electric equipment comprises circuit
-14.3 board, computer and equipment & parts,
4,224 Chemical -18.0 Transistor, and other electronics
Source: Deloitte Analysis, TPSO

3,039 Textile -17.9
-14.4
Thailand’s Export Destinations
United States, China, and Japan are the top 3 countries for TH’s export. ASEAN economies also contributed to about a quarter of
total export. However, in 6M2023, the total export value declined 5.4% (YoY).
6M2023 Percentage Change (YoY)
Percentage Contribution
Unit: mUSD -4%
ASEAN CN EU India -2%
24,004 23,128
US JP HK Others 11,476 11,203
6M2023 June 2023 US 6M2022 6M2023 EU 6M2022 6M2023
-4%
8.9% 7.9% 8.7% -9%
13.9%
3.7% 7.3%
18,454 17,766
3.6% 5,607 5,109
12.6%
5.0%
17.0% 3.4% 6M2022 6M2023 6M2022 6M2023
China India
23.1%
16.4% -2%
-7%
12,715 12,516
22.4% 5,547 5,179
22.4%
23.8% Japan 6M2022 6M2023 Hong 6M2022 6M2023
Kong
-10%
Total Export Value Total Export Value
37,295 33,601 6M2023 Total Export Value
141,170 mUSD 24,846 mUSD
Source: Deloitte Analysis, TPSO ASEAN 6M2022 6M2023
-5.4% (YoY)
1Q2023 FDI inflow had been mostly contributed by Financial Service, Insurance, and Real Estate sectors,
followed by Manufacturing, in which China has been a lead investor.
However, FDI inflow in 2022 was led by Japan. Singapore also saw becoming a major player for Thai market.
1Q2023 FDI inflow to TH by 1Q2023 FDI inflow to TH by 1Q2023 China FDI inflow 1Q2023 China FDI inflow to TH by sectors
Countries (%) sectors (%) to TH by sectors (%) - Manufacturing Top 5 (million THB)
16.9% 11.0% China

9.7% Japan Rubber and
2,672
US plastics products
8.5%
Singapore 12.0% Financial Service, Insurance,
Real estate Electrical equipment 793
54.0% Others Manufacturing 2.2%
Motor vehicles,
Total FDI inflow Wholesale and retail trade 366
trailers and semi-trailers
474 billion THB Mining and quarrying
Transportation and storage Paper 291
Historical 2020-1Q2023 by Top Countries’ Construction
Percent Contribution to TH FDI inflow 8.3%
Others Chemicals and
30
chemical products
17.1 16.9 0.8%
15.9 15.8 CN
4.9% Source: Deloitte Analysis, Bank of Thailand, MOTS
13.7
15.2 0.2%
12.9 0.3% 0.0%
0.4% 0.1%
13.7 11.0 0.2% 0.0%
12.1 JP 73.9% 96.7%
9.7
US
9.9 7.7 1Q2023 1Q2023
SG Total China FDI inflow to TH
8.8 8.5 Total FDI inflow
474 billion THB 80 billion THB
2020 2021 2022 1Q2023
Contributors
Narain Chutijirawong, Ph.D. Tasada Sangmanacharoen
Executive Director Senior Consultant

Clients & Markets Clients & Markets
nchutijirawong@deloitte.com tsangmanacharoen@deloitte.com
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Thailand’s Economic Outlook

United States 2022E 2023F 2024F

2022 2023F 2024F 1.4

Source: Deloitte Analysis, IMF WEO July 2023

SEA SEA Remains on a growth trajectory with 5-year CAGR of

Inflation Rate Policy Rate

El Nino, fears of fires and drought Why does it matter?

• Thailand's domestic milled rice prices jumped nearly 20%

Commodities Price Index (2010=100) Commodities Price

Rice, Thai 5% ($/mt)

Natural gas, US ($/mmbtu)

Source: Deloitte Analysis, World Bank

Individual mortgage (-1.0% YoY) Others

Source: Deloitte Analysis, National Bureau of Statistics of China

Real GDP Growth (%YoY)

1 • Expanding private consumption

Private Private Public Exports of Goods Imports of Goods

Source: Deloitte Analysis, NESDC

30 29.8 32.3 32.6 Increase permanent workforce 20

20 18.0 Lower quality on some services 5

Headline Inflation (%) Inflation forecast (%)

3.0 Target range

Inflation in August 23 = 0.88% Source: Bank of Thailand

Easing inflation contributed by Watchlist

Private Consumption Index (Seasonally Adjusted) Business Sentiment Index

Source: Deloitte Analysis, Bank of Thailand, TPSO

108 Negative Factors

0 3-month Forecast watchlist

High uncertainty of global economy

Declined TISI Increased TISI

• Petroleum refinery • Packaging • Automotive parts • Digital

• Air conditioner • Rubber • Automotive • Medical equipment

• Textile • Machine • Plastic Red Flag • Cement • Furniture Mastering

• Jewelry • Electronics • Paper • Metal • Creative craft

• Leather • Sugar • Roof and equipment • Environmental

Note: As of July 2023

1.5 • The present context of sustained economic

30 Factors influencing Thai baht

5,385 Construction materials -16.5

Source: Deloitte Analysis, TPSO

6M2023 June 2023 US 6M2022 6M2023 EU 6M2022 6M2023

16.9% 11.0% China

Narain Chutijirawong, Ph.D. Tasada Sangmanacharoen

Executive Director Senior Consultant

About Deloitte Thailand

© 2023 Deloitte Touche Tohmatsu Jaiyos Co., Ltd.

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