Bangkok: The industrial confidence index for March and the next three months has fallen due to apprehensions about the trade war and the effects of a recent earthquake. The government is being urged to urgently address these issues by exploring new markets and enhancing the potential of Thai industries.
According to Thai News Agency, the Federation of Thai Industries (FTI) reported that the Industrial Confidence Index for March 2025 dropped to 91.8 from 93.4 in February 2025. The earthquake and its aftershocks have dampened tourist confidence, resulting in a slowdown of economic activities within the country. Additionally, the United States' decision to increase import tariffs on steel and aluminum products by 25%, effective March 12, 2025, is anticipated to impede exports to the US, a significant market for Thailand. In 2024, steel and aluminum exports constituted 18.16% and 13.29% of Thailand's total exports, respectively. The tourism sector is also expected to decline, with February 2025 seeing a 44.92% drop in Chinese tourists and a 16.57% decrease in Malaysian tourists compared to February 2024, driven by safety concerns and the onset of the fasting period.
Furthermore, car exports have been impacted due to trading partners delaying purchase orders, awaiting clarity on US import tax policies. This has led to an 8.34% decline in car export orders in February 2025, affecting downstream industries such as automotive parts and accessories. The region's purchasing power remains fragile, influenced by the downward trend in agricultural product prices, particularly rice, sugarcane, and cassava.
Positive factors include measures to stimulate the real estate sector, like the relaxation of the housing loan (LTV) regulation, which positively affects the construction material cluster. Furthermore, the Oil Fund Management Committee has adjusted the remittance rate to the Oil Fund, reducing energy costs by 1 baht/liter in two stages: 50 satang/liter on March 28, 2025, and another on April 4, 2025.
A survey of 1,357 entrepreneurs across 47 industrial groups conducted by the FTI in March 2015 revealed that 57.3% were concerned about the domestic economy, 53.4% about the global economy, and 43.6% about the domestic political situation. Conversely, entrepreneurs expressed less concern regarding oil prices (31.9%), exchange rates from an exporter's perspective (30.5%), and loan interest rates (18.3%).
The index forecast for the next three months also declined to 95.7 from 97.6 in February 2025, as entrepreneurs remain worried about the US tariff hike. Nonetheless, supporting factors are anticipated, such as loan guarantee measures for pickup trucks via the Small Industry Credit Guarantee Corporation (TCG), aiding SME entrepreneurs in accessing loans and stimulating the domestic automotive industry. Economic stimulus measures, like the Half-Half Travel initiative and the 10,000-Baht Phase 3 economic stimulus project, are expected to boost consumption and money circulation in the economic system in the second quarter of 2025.
Recommendations for the government include integrating cooperation to prepare an earthquake response plan and establishing systems for inspecting building and construction safety. Expediting disaster relief is crucial for building confidence across sectors, minimizing damage to life and property, and mitigating economic impacts. Additionally, accelerating the opening of potential foreign markets to support Thai products and promoting the transformation of domestic industries to new target industries (S-Curve and New S-Curve) are advised, including implementing tax measures, providing subsidies for business transitions, upskilling and reskilling the workforce, and reducing utility bills.