Thai Industrial Sentiment Indices Dip in July Due to Border Disputes, According to FTI Report
In the first half of 2025, Thailand's GDP growth was 3.0% year-on-year, but projections for full-year growth have been revised downward to around 2.1%, reflecting slower momentum and considerable downside risks. Inflation has been negative for four consecutive months, pointing to subdued domestic demand and subdued price pressures. Retail and consumer confidence have weakened due to rising living costs, economic uncertainty, and weak purchasing power, with the retail sector hitting a 42-month low. Exports have been relatively strong, but tariff risks and trade tensions pose a significant threat to sustaining this growth.
Looking back to July 2022, similar challenges were present. Rising global protectionism and U.S. tariff impositions on Thai goods have been a persistent challenge. In July 2025, the U.S. imposed a 19% import tariff on Thai products, still higher than tariffs on other competitors, negatively affecting investor confidence and export demand. Sectoral U.S. tariffs under Section 232 (25–50% on key products like automobiles, steel, aluminum, copper) disrupt global supply chains involving Thailand, adding to external trade pressures and uncertainty. Domestic political uncertainties and unresolved border tensions exert downside pressure on economic confidence and growth outlook. Weak private investment and sluggish domestic consumption continue to hamper growth, alongside fragile investor sentiment despite government efforts and record foreign direct investment approvals in prior years.
The ongoing tensions between Thailand and Cambodia have also taken a toll on the border trade, which plunged by 32.9% in June compared to May, to 10.9 billion baht, and was down 23.3% year-on-year. The Federation of Thai Industries (FTI) conducted a survey of 1,356 FTI members across 47 industries to compile the July TISI, which fell to 86.6 in July, its lowest level in 36 months. 57.2% of business operators expressed concerns over government policies, 66.7% were worried about the global economic situation, and 70.1% expressed concerns about the domestic economy.
The FTI has proposed several measures to address these challenges. They urge the government to take urgent action to restore business sentiment, including rehabilitation measures for companies affected by the conflict and support for Thai investors in Cambodia. The FTI also proposed soft loans and eased loan approval conditions for SMEs and businesses hit by US tariffs, along with assistance to adapt to new trade barriers. They also suggested accelerated infrastructure investment for natural resource management, flood prevention, and improved water distribution to strengthen ecological resilience.
The decline in the TISI was primarily due to escalating border conflicts between Thailand and Cambodia. However, the FTI president, Kriangkrai Thianukul, mentioned two positive factors helping to cushion the impact on businesses: the Half-Half tourism stimulus programme and 1.06 trillion baht in investments during the first half of 2025. Despite the decline in the TISI, Kriangkrai warned that sentiment is likely to drop further in the next three months due to the impact of US reciprocal tariff measures. The FTI reported that the Thai-Cambodian border conflict has already had a severe economic impact.
In summary, the overall sentiment of Thai industries is cautiously optimistic but tempered by significant downside risks, while the indicators for July 2022 (inferred by context as a period of concern) showed decline primarily due to economic uncertainties and external trade pressures. The FTI's survey reveals that business operators are concerned about government policies, the global economic situation, and the domestic economy. The ongoing tensions between Thailand and Cambodia, the US reciprocal tariff measures, and the rollout of the economic stimulus package are key factors affecting business sentiment. The FTI has proposed several measures to address these challenges and restore business sentiment.
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