Picture courtesy of SiamRath

Thailand’s Federation of Thai Industries (FTI) has called on the government to help manage the baht, support businesses in meeting the EU’s Carbon Border Adjustment Mechanism (CBAM), and expand opportunities for small and medium-sized enterprises (SMEs), after industrial confidence fell in December 2025. The Industrial Confidence Index dropped to 88.2 from 89.1 in November, reflecting mounting domestic and external pressures on the manufacturing sector.

The findings were announced on 21 January 2026 by Kriengkrai Thiennukul, Chairman of the FTI, following a survey of industrial sentiment for December 2025. The decline was attributed to several factors, including clashes along the Thai–Cambodian border that disrupted economic activity in Ubon Ratchathani, Surin, Buri Ram, Si Sa Ket, Sa Kaeo, Chanthaburi and Trat. Concerns also grew over policy continuity after the dissolution of parliament, particularly regarding the second phase of the Kon La Krueng Plus scheme and Thailand–US trade negotiations.

Industrial production slowed after earlier acceleration, compounded by fewer working days during the year-end holiday period. Exports showed signs of weakening in line with economic slowdowns in key partner markets such as China, Japan and ASEAN countries, while PM2.5 air pollution affected outdoor activities and public health. A stronger baht, driven by a US policy rate cut, capital flows and domestic liquidity, reduced exporters’ revenues and increased costs for foreign tourists, weighing on the tourism sector.

Despite these challenges, several supportive factors helped cushion the economy in December. Year-end spending under the Kon La Krueng Plus scheme before its expiry on 31 December 2025 boosted consumption, while the Monetary Policy Committee cut the policy rate by 0.25 percentage points from 1.50% to 1.25% per year, easing financial burdens on businesses and households. Diesel fuel fund contributions were reduced by 20 satang per litre, and some operators cut diesel and petrol prices by 50 satang per litre from 24 December 2025, lowering living and business costs.

According to M.L. Peakthong Thongyai, FTI Vice-Chairman for Economic and Academic Affairs, a survey of 1,330 companies across 47 industries showed rising concerns over the domestic economy (62.8%), the global economy (57.4%), exchange rates (50.4%) and energy prices (28.6%). Concerns declined over government policy (40.3%), access to credit (25.3%) and loan interest rates (17.1%). The three-month outlook index rose to 95.7 from 94.9, supported by the new import tax on online platform goods effective from 1 January 2026 and expectations that a new government would restore policy clarity.

However SiamRath reported that risks remain from potential renewed border tensions and the EU’s CBAM, which took effect on 1 January 2026 and requires emissions reporting before carbon charges begin in 2027. The FTI urged authorities to stabilise the baht by tightening oversight of foreign exchange, capital flows, gold and digital asset trading, support firms in CBAM compliance through funding and technical expertise, and raise the share of government procurement awarded to SMEs via the e-GP system to 50% as a formal KPI.

Key Takeaways

• Thailand’s industrial confidence index fell to 88.2 in December 2025 amid border, policy and currency concerns.

• The FTI is urging state support on exchange rates, CBAM compliance and SME market access.

• Short-term sentiment improved on tax measures, rate cuts and expectations of a new government.

  

Adapted by ASEAN Now from Siamrath 2026-01-22

 

 

Probably too late now they should have moved sooner exports and tourism is going to suffer at the hands of the elites