Thai Business Confidence Jumps After Seven Months on New Government Hopes
Industrial Confidence Index hits 87.8, buoyed by swift cabinet formation and rising foreign direct investment despite strong Baht and border trade collapse
- Thai industrial confidence rose for the first time in seven months, a jump attributed to the rapid formation of a new government which restored private sector confidence.
- The improved sentiment is supported by strong economic indicators, including a 125% year-on-year surge in Foreign Direct Investment (FDI) and growth in exports.
- Future optimism is driven by expectations of upcoming government stimulus measures and a tourism boost from the 33rd SEA Games.
- Despite the positive outlook, the sector faces significant challenges, including a strong Thai Baht hurting exporters, a collapse in border trade, and flood damage to agriculture.
Thai industrial sentiment rebounded in September, climbing for the first time in seven months.
The latest survey by the Federation of Thai Industries (FTI), released on Wednesday, shows the Industrial Confidence Index (ICI) rising to 87.8, up from 86.4 in August 2025.
According to Apichit Prasoprat, vice chairman of the FTI, the improvement is largely attributed to the rapid formation of the new government.
This swift political resolution restored private sector confidence and is expected to facilitate the efficient rollout of key economic stimulus and investment measures.
Liquidity for SMEs also showed clear improvement after the Ministry of Finance eased conditions for the Thai Credit Guarantee Corporation (TCG), enabling it to underwrite loans from non-bank financial institutions.
Exports and Investment Growth
The report highlighted continued expansion in key sectors.
Exports of agricultural products and electronics continued their growth trajectory, particularly in markets like Malaysia, Vietnam, and Taiwan.
Domestically, electric vehicle (EV) sales maintained robust growth, driven partly by the recent “BIG Motor Sale 2025” event.
Crucially, Foreign Direct Investment (FDI) surged. Between January and August 2025, foreign investment grew by a massive 125% year-on-year, totalling 225.5 billion baht.
The Eastern Economic Corridor (EEC) was a major beneficiary, attracting 197 new foreign corporate entities, which accounted for 33% of the total investment.
Headwinds and Risks
Despite the optimism, the industrial sector still faces significant headwinds:
Currency Strength: The appreciation of the Thai Baht against regional rivals, driven by a weakening US Dollar, has negatively impacted exporter income and reduced the global competitiveness of Thai goods.
Border Trade Crisis: Prolonged closures of checkpoints with Cambodia and the key Mae Sot–Myawaddy crossing with Myanmar led to a collapse in border trade. Trade with Myanmar contracted by 20.8% year-on-year, while trade with Cambodia plummeted by 99.9%.
Agricultural Damage: Heavy monsoon rains and flooding damaged crop yields, depressing prices for major commodities like rice, cassava, and rubber, which in turn hurts farmers' income and regional purchasing power.
Positive Forecast
The ICI forecast for the next three months is even more optimistic, rising to 91.8.
This is largely based on expected government stimulus measures, including the 25-billion-Baht roll-out of the “Khon La Khrueng” (Half-Half) co-payment scheme, expected in October.
Furthermore, the hosting of the 33rd SEA Games in December is anticipated to boost the tourism sector and local economies ahead of the Christmas and New Year holidays.
However, the outlook is clouded by external risks, including potential US import tariffs on Thai goods (under Section 232) and ongoing uncertainty over reciprocal tariffs.
FTI Recommendations to Government
The FTI made several policy recommendations to the government to sustain the recovery:
Promote Local Products: Implement a Key Performance Indicator (KPI) requiring government agencies to procure at least 15% of Made in Thailand (MiT) products by 2026, using e-bidding methods to support domestic industry.
Reduce Utility Costs: Review electricity tariffs and reduce electricity guarantee deposits for businesses with good payment records to enhance competitiveness.
Encourage FX Hedging: Subsidise fees for Foreign Exchange (FX) hedging tools and provide training to SMEs to help them manage currency risk effectively.
