Global economic growth in 2023 is expected to remain sluggish, following a year roiled by the war in Ukraine and soaring inflation.
The International Monetary Fund projects global economic growth of 2.7% in 2023, slowing from 3.2% last year and 6% in 2021.
A key factor behind the slowdown is a shift in monetary policy as central banks try to bring down soaring inflation, with higher interest rates starting to take the heat out of domestic demand.
Global inflation is predicted to have peaked in late 2022 after increasing from 4.7% in 2021 to 8.8% last year. Estimates have inflation dropping to 6.5% in 2023 and 4.1% by 2024.
Geopolitics is a risk factor for the global economy this year, particularly the conflict between Russia and Ukraine, as well as tension between China and Taiwan.
Given the myriad negative external factors that may derail the Thai economy from its recovery path, chief executives of leading domestic firms have shared their perspectives on the country's economic outlook for 2023.
Recovery on course
The Thai economy will continue to recover in 2023, mainly thanks to the tourism sector even as the global economy slows, says the head of Krungthai Bank (KTB).
Payong Srivanich, president of KTB and chairman of the Thai Bankers' Association, said the country's economic rebound would carry on this year, supported by tourism.
Domestic consumption should also facilitate Thai GDP expansion, in line with greater economic activities following the country's full reopening in October 2022, he said.
Krungthai Compass, a research unit under KTB, estimates Thai GDP growth of 3.2% for 2022, rising to 3.4% in 2023. Foreign tourist arrivals are expected to tally 10.2 million in 2022, doubling to 21.4 million this year, representing more than 50% of the pre-pandemic high of 39.8 million in 2019.
Mr Payong said private investment should grow this year, supporting loan expansion in the banking sector. This banking loan growth is projected to be contributed mainly by corporate clients, whose financial position remains strong.
"Large local corporations are still strong overall and the business segment will support loan growth in the banking sector this year, in line with positive growth of private investment," he said.
However, some individuals and small and medium-sized enterprises are still fragile segments.
Banks should continue to take care of these customers and provide them with financial assistance through long-term debt restructuring programmes and other debt solutions under Bank of Thailand measures, said Mr Payong.
According to National Credit Bureau data, there are around 3 million borrowers in the household sector who want financial assistance to solve their debt problems, he said.
Although the Thai economy is projected to continue its rebound in 2023, more challenges are likely from global uncertainties, said Mr Payong.
The think tank said this year the US economy is likely to show clearer signs of an economic slowdown, while the euro zone could go into recession and China's economic expansion could be delayed by its Covid restrictions.
Krungthai Compass predicts global economic growth of 2.2% in 2023, a decline from a projection of 3.1% for 2022.
Given the global outlook, the research unit forecasts Thai export value growth of only 1.2% in 2023, compared with 7% growth in 2022.
Bullish despite global risks
Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said he feels positive about Thailand's economic outlook in 2023, despite mounting fears of a global recession.
"We still believe the Thai economy can grow, bucking the global trend this year, helped in part by wider coverage of vaccinations, Thailand's acceleration to reopen the country to international tourists, and rapid resumption of economic activity," said Mr Sanan.
He said the Asia-Pacific Economic Cooperation (Apec) 2022 summit held in Bangkok in November was considered a success, helping to stimulate the Thai economy during the final months.
The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) estimated the Apec summit would generate 500-600 billion baht in benefits for Thailand's economy over the next 3-5 years.
This economic value stems from tourism, cross-border trade and foreign direct investment (FDI).
The tourism sector, which includes soft power, Thai food and culture, is expected to attract an additional 100,000-200,000 foreign travellers in the short term after they were inspired by news and information about Apec, according to Mr Sanan.
He said the positive image generated by Thailand during the meetings is likely to make investors see the country as an investment destination for the bio-, circular, and green economic model, in addition to energy, electric vehicles, digital economy, tourism, and healthcare, particularly in the Eastern Economic Corridor.
Against this backdrop, the JSCCIB expects 600 billion baht worth of FDI to arrive over the next 3-5 years.
The committee also expects the Apec Summit to increase trade and investment between Thailand and China, especially for fruit and other agricultural products.
According to Mr Sanan, the chamber expects foreign tourist arrivals to exceed 20 million this year, up from an estimated 11-11.5 million in 2022.
He is also bullish on the country's export outlook this year, although he acknowledged the growth rate would decelerate from 2022 because of global headwinds.
Growing but uneven revival
Yol Phokasub, chief executive of Central Retail Corporation, the country's biggest mall operator, said Thailand's economy is set to grow by 3.4%-3.7% this year, but with an uneven recovery across sectors.
"Thailand's key growth engines, the tourism and retail sectors, which includes hotels, restaurants and malls, are expected to post a strong recovery with the return of domestic spending power," said Mr Yol.
"Along with China easing the restrictions of its zero-Covid policy, which should permit international travel by April, the number of foreign arrivals to Thailand is expected to reach 22 million people. These changes will boost the growth of the retail and service industry and stimulate spending in the Thai economy."
However, he warned other sectors such as exports can expect certain categories to experience slower growth as a result of the global recession.
As for Central Retail, Mr Yol said the company was successful in becoming a first mover, building Thailand's first comprehensive omni-channel ecosystem and changing the game for the retail industry.
For 2023, Central Retail suggests businesses operate with increased prudence and agility given the uncertainties.
He said the positive recovery in the tourism industry enabled the company to project additional growth opportunities across three segments: fashion, hardline and food.
According to Mr Yol, the increasing number of tourists is expected to spur spending in the fashion segment, while the recovery of the service and hospitality sectors will require renovation and expansion, which will boost demand for construction, renovation and DIY materials across Central Retail's hardline offerings.
In addition, he sees an opportunity for growth with the expected increase in local consumption and tourist spending.
Political factor
Srettha Thavisin, president and chief executive of SET-listed developer Sansiri, said the country's economic outlook this year would be better than in 2022, though it depends on the new government.
"The global economy in 2023 will likely face a recession because of geopolitical conflicts," he said.
"Even with a global recession and inflation, the new administration can help to improve the economy."
Mr Srettha said this year's general election could shape the country's economy as every political party has prioritised it as their first task.
"The new government and premier should take care of all parties, all sectors and all generations, in a healthy balance," he said.
"A good leader should make everyone stay together.
"The property sector grows along with GDP growth. If GDP does not grow, the property sector cannot grow."
Kerry prepares for turbulence
Alex Ng, chief executive of leading courier Kerry Express (Thailand), has expressed concerns about the ongoing economic headwinds and high inflation, which he said could erode consumer spending.
These challenges could take a toll on e-commerce, which would cause Thailand's express delivery segment to record flat growth in 2023, he said.
Mr Ng said Kerry is confident it can grow 5-10%, which is in line with the overall e-commerce market, forecast to gain 10% in 2023.
Express delivery operators, including Kerry, are sharpening their focus on cost optimisation, being more cautious on marketing spending while using Chinese automation technology to support their businesses, he said.
Kerry's smart locker business, powered by its Chinese affiliate Hive Box, can help reduce costs from opening new branches, said Mr Ng.
The lockers allow users to send and receive parcels in their communities.
He said the company is gearing up to reduce fuel consumption through better routing management, while providing incentives for drivers who can save on fuel costs, which he describes as a win-win strategy.
"At present, fuel costs are not expected to surge and they have moderated," said Mr Ng.
Kerry has pursued a cross-border delivery business from China and overseas to Thailand, backed by SF Holding, a Chinese logistics giant that is also its shareholder.
SF Holding has significant operations in different parts of China, Hong Kong and major regional gateways.
Kerry is supported by various first-mile delivery hubs in different locations in China, Taiwan, Japan and Hong Kong, while providing last-mile delivery services in Thailand.
"We will put our focus on cross-border express and cross-border e-commerce," said Mr Ng.
He said Kerry sees a business opportunity for shipping products from China to Thailand with broader product categories that interest Thai customers.
Mr Ng said the price war in the express delivery segment would continue.
He declined to comment on the prospect of business consolidation or layoffs.
According to a report by the Economic Intelligence Center of Siam Commercial Bank, cross-border transport, the shipment of bulky goods, integrated logistics services and cold chain delivery are regarded as blue ocean fields for parcel delivery operators.
Stronger foundation
Santisuk Klongchaiya, chief executive of Thai AirAsia (TAA), said after losing opportunities in the first two quarters of 2022 because of travel restrictions in Thailand and many other countries, the outlook for 2023 is expected to be promising as international travel is back to normal in most nations.
With growing travel demand forecast for 2023, airlines face a significant challenge in preparing seat capacity as well as managing operational costs amid fluctuating jet fuel prices, he said.
"Airlines might have aircraft available parked in their fleet, but finding maintenance facilities will be difficult as every airline has to queue up for such services before flying those jets again," said Mr Santisuk.
He said 2022 signalled the start of a recovery, while 2023 should lead to a stronger foundation, though not yet a full recovery.
For the aviation industry in Thailand, sentiment won't return to normal until 2024 as long as China remains closed, said Mr Santisuk.
In addition, the Russia-Ukraine war has no end in sight and this issue will continue to affect fuel prices, he said.
Another critical challenge for Thailand is the manpower shortage at Suvarnabhumi airport, where TAA and Thai AirAsia X base their operations.
Insufficient staff have led to delays for many ground services, such as baggage claim and immigration services during rush hours.
Mr Santisuk said this problem needs to be solved soon because the number of trips is expected to skyrocket this year, based on the Tourism Authority of Thailand's prediction of 25 million foreign arrivals.
Growing energy demand
Chaiwat Kovavisarach, chief executive and president of Bangchak Corporation Plc (BCP), is aware of worries over a global recession, but he still believes worldwide energy demand will return to pre-pandemic levels in 2023.
His prediction corresponds with the Energy Policy and Planning Office, which forecast last month Thai energy consumption would grow by 3.2% this year, driven by economic growth estimated at 3-4%.
The forecast was made despite the World Bank's warning of a recession after central banks raised interest rates in response to high inflation.
A recession could reduce global oil demand and cause a drop in crude oil prices, but energy demand from China is likely to increase as Beijing is expected to further relax its zero-Covid policy, said Mr Chaiwat.
More economic activity, including an increase in air travel, stimulated energy demand last year after governments eased measures against the pandemic and reopened their borders.
He said global oil refineries are expanding their production capacity to serve higher demand in European countries, which need oil to replace coal and gas following a ban on Russian energy exports to punish Moscow for invading Ukraine.
BCP expects its upstream oil and gas production to be among the key drivers of its business. The company plans to increase daily oil and gas output this year. BCP also wants to acquire more assets in 2023, said Mr Chaiwat.
AIS reshaping mindset
Somchai Lertsutiwong, chief executive of Advanced Info Service (AIS), the country's biggest mobile operator by subscriber base, highlighted three important challenges for businesses in 2023.
The first is new developments after the pandemic, such as changes to the economic system.
"This will be a reset, with everyone starting a new journey at the same time," Mr Somchai said.
The second challenge is businesses have to capture new opportunities through digitalisation, as well as the upskilling and reskilling of manpower, he said.
"Thailand still beats its peers in the region because it was the first mover for 5G network installation," said Mr Somchai.
Core infrastructure such as 5G will be beneficial to digital adoption, new innovation, and emerging apps and platforms, he said.
"In the new economy, more digital talents are needed and efforts should be made to create them through training or importing them," said Mr Somchai.
The final challenge is Thailand needs to pivot towards reforms through collaboration between the private and public sectors, with the aim of creating fair benefits in the sharing economy, he said.
"The government must build a new mindset as an economic supporter, not merely concentrating on a regulatory role," said Mr Somchai.
It is also important for enterprises and employees to embrace digital transformation and upskilling, he said.
A number of corporations, including AIS, have begun reshaping their mindsets in internal management and operations to cope with the complicated factors ahead, said Mr Somchai.
He said recruitment needs to be more selective, focusing on those with high-level skills.
According to Mr Somchai, businesses also face a decline in revenue and increasing costs.
In 2022, the telecom sector posted revenue growth of 2-3%, while operational expenses surged 7-8%.
"A similar trend will be clearly seen in 2023," he said.
The telecom market's previous annual revenue growth was 1-2% higher than the expansion of national GDP, said Mr Somchai.
But in 2023, the sector's growth is expected to be slower than the country's GDP expansion for the first time, despite strong growth in mobile internet usage, he said.
