Thailand’s industrial sentiment hits two-year low amid political strife

Thailand’s industrial sentiment index experienced a decline for the third consecutive month in June, reaching its lowest point in two years, according to the Federation of Thai Industries (FTI). The drop is attributed to a sluggish economy, weak demand, and increasing bad debt problems.

The FTI reported that the industrial sentiment index fell to 87.2 in June, down from 88.5 in May. The ongoing political uncertainty has also impacted business confidence, with smaller firms particularly affected by liquidity issues as banks tighten their lending policies.

Political turmoil continues with Prime Minister Srettha Thavisin facing a Constitutional Court case that could lead to his dismissal. The 62 year old Thai premier denies any wrongdoing, and the court is scheduled for its next hearing tomorrow.

Despite these challenges, the FTI highlighted that tourism remains a crucial pillar supporting Thailand’s economy. The country welcomed 18.9 million foreign tourists from the beginning of the year to yesterday, marking a 34% increase year-on-year. Among these visitors, approximately 3.7 million were from China, according to government data, reported Bangkok Post.

The Thai government projected that the nation’s economy, Southeast Asia’s second-largest, will grow by 2.5% this year. This forecast follows a 1.9% growth rate last year, which lagged behind other regional economies.

In related news, Thailand’s economy is experiencing a gradual recovery, with projected growth of between 2.2% and 2.7% this year, according to a recent announcement by a prominent joint business consortium. The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB), which includes key stakeholders from these sectors, has maintained its previous growth forecast.

Exports, a crucial component of Thailand’s economic engine, are also expected to increase by 0.5% to 1.5%, consistent with earlier estimates provided by the JSCCIB. Despite this, the recovery of the export sector has been sluggish, and high levels of household debt continue to dampen consumer spending, the group noted in a statement.