Editorial – Recommendations from the Federation of Thai Industries
Thailand's industrial confidence fell to 88.6 in March as geopolitical tensions, surging energy costs, and raw material shortages squeeze manufacturers and exporters across automotive, chemicals, and other key sectors.
The Federation of Thai Industries (FTI) has released its March industrial confidence index, which fell to 88.6 from 90.0 in February. The decline stems from escalating tensions between the United States, Israel, and Iran, along with the closure of the Strait of Hormuz, which has driven up energy and shipping costs and increased production expenses for manufacturers.
These geopolitical developments are also affecting Thai exports to the Middle East, particularly in the automotive, air conditioning, and wood products sectors. Diesel prices have surged from 36.07 baht to 40.74 baht per liter as of March 31, raising costs for transport, agriculture, and industry, while fuel shortages at service stations are disrupting local economic activity.
Industry is also struggling with raw material shortages—including plastic pellets, chemicals, packaging materials, and aluminum—forcing manufacturers to absorb higher production costs by raising prices. The FTI projects the industrial confidence index will decline to 95.9 over the next three months, down from 97.4 in February, due to multiple pressures.
Businesses remain concerned about prolonged U.S.-Israel-Iran tensions, which are straining supply chains and logistics, impacting both manufacturing and tourism. Electricity rates under the automatic fuel adjustment mechanism are expected to rise to around 4 baht per unit from May to August 2026, further increasing industrial energy costs.
The FTI notes the government is preparing targeted relief measures and proposes reducing fuel excise taxes while utilizing the fuel fund to stabilize diesel prices, along with preventing hoarding and price manipulation. Additional recommendations include promoting energy efficiency, supporting consolidated shipping models, managing backhaul trips to reduce empty runs, restricting scrap metal, aluminum, and paper exports to preserve raw materials, and accelerating the development of alternative raw material sources and databases.
