Thailand Industrial Confidence Index Drops Below 90 on Rain, Rising Costs
Thailand's industrial confidence index fell to 89.70 in August as heavy rainfall and rising production costs weighed on manufacturers, with the automotive sector particularly hard hit by weak consumer demand and high financing costs.
The Federation of Thai Industries said the August 2025 industrial confidence index stood at 89.70, down from 90.0 in the previous month. Heavy rainfall across multiple regions has increased risks to major economic areas including transport and agricultural supply, while energy and petrochemical raw material prices remain elevated, pushing up production costs for affected industries.
The automotive sector faces constraints from weak consumer purchasing power and limited credit access, especially for pickup trucks, causing vehicle sales in the first seven months of 2025 to fall 17.38 percent compared with the same period last year. Investment remains concentrated in targeted industries, limiting SMEs and traditional manufacturers' access to investment opportunities while they battle high production costs, financing challenges, and competition from imported goods.
Federation chairwoman Pimjai Lee Itsaranukul noted that programmes like Thailand Help Thailand Plus and Thailand Help Thailand x Local Low Cost are helping inject money into the grassroots economy and stimulate consumer spending and regional economic activity. The three-month forward-looking confidence index is expected to rise to 97.0 from 96.1, reflecting improved business sentiment supported by the Thailand Fast Pass initiative and end-of-year holiday spending.
Economic stimulus measures in the final quarter of 2025 and energy transition policies are likely to drive money circulation and economic activity. However, the sector faces risks from US tariff policy uncertainty following Thailand's Tier 2 designation in transshipment reports, which could affect non-technology exports. Middle East tensions threaten supply chain stability and energy price volatility, while Super El Niño weather patterns may damage agricultural output and industrial operations.
The Federation recommended that the government promote E20 petrol as the national fuel standard to lower energy costs and import dependence while adding value to agricultural products, link foreign direct investment to Thai suppliers through Board of Investment incentives, and encourage consumers and state agencies to buy Thai products through cooperation with retailers, modern trade, and e-commerce platforms.
