Macroeconomics/Industrial confidence index

Editorial staff

Thai entrepreneurs concern over financial costs, increasing interest and uncertain global economy.

Industrial confidence index showed entrepreneurs remain to have concerns on financial costs and increasing interest rates, and uncertain global economy.

Kriengkrai Theinnukul

Kriengkrai Theinnukul, chairman of the Federation of Thai Industries (FTI), and Montri Mahaplerkpong, vice chairman of the Federation of Thai Industries (FTI), jointly disclosed the results of the industrial confidence index survey for March 2024, which stood at 92.4, increasing from 90.0 in February 2024. When considering the components of the index, it was found that overall sales, total orders, production volume, and business performance have increased compared to the previous month.

However, Mr Kriengkrai said there are still factors exacerbating household and business debt problems, which have limited the economic recovery while entrepreneurs remain concerned about financial costs and increasing interest rates, as well as the uncertain global economy, particularly in China, Japan, and the European Union, which has hindered a full recovery in exports.

The increased confidence is supported by the gradual recovery of private consumption, reflecting consumer demand for consumer goods and durable goods such as household electrical appliances, air conditioners, and adjustable furniture, which have shown increased sales, while the tourism sector continues to expand consistently.

It has benefited from the free visa measures implemented recently. In terms of exports, there has been a notable expansion in line with the global and domestic economic recovery, with key trading partners such as the United States, India, and Australia.

Montri Mahaplerkpong

During March, entrepreneurs accelerated the production of goods prior to the continuous holidays during the Songkran Festival. Additionally, they have also benefited from the positive effects of the measure to cap diesel prices at no more than 30 baht per litter, which helps reduce production costs and transportation expenses for the industrial sector.

From a survey of 1,336 entrepreneurs covering 46 industry groups of the Federation of Thai Industries (FTI) in March 2024, it was found that the factors causing increased concern among entrepreneurs were the interest rate on loans at 75.0%, oil prices at 55.8%, and the domestic economy at 50.2%, respectively. Conversely, factors causing decreased concern were the global economy at 78.5%, exchange rates (from the exporter’s perspective) with the exchange rate referenced against the US dollar at 36.1%, and the domestic political situation at 30.5%, respectively.

While the index is forecasted to reach 100.8 in the next three months, increased from 100.0 in February 2024, supported by factors such as government tourism promotion measures, disbursement budget in the second quarter of 2024, as well as improved exports due to the expansion of enterprises in the global market, there are still risk factors to monitor. These include unresolved political conflicts that have led to increased oil prices in the global market, as well as trade barriers imposed on Thai exports, including environmental measures and the European Union’s Carbon Border Adjustment Mechanism (CBAM), among others.

FTI recommended the government to accelerate disbursement of the fiscal 2024 budget, particularly overdue capital expenditures and government procurement, to inject funds into the economy promptly; to take the lead in organizing international trade fairs both centrally and regionally to enhance distribution channels for businesses and promote Soft Power, including supporting roadshows to showcase products abroad; and the stability of the Thai baht exchange rate and promote importers and exporters to utilize risk management tools against exchange rate fluctuations.