Factory closures in Thailand rose by 58% in the early months of 2026, as industrial leaders warned that rising energy costs, supply chain strain and weak demand could push the economy towards stagflation. The Federation of Thai Industries (FTI) said the sector is under intensifying pressure, with manufacturing and trade left in a fragile state.

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Kriengkrai Thiennukul, chairman of the FTI, said multiple challenges weighed heavily on industry in the first quarter of 2026. Among them were uncertainties over potential US trade measures, after Thailand climbed from 11th place in 2024 to seventh in 2025 among countries drawing Washington’s attention due to its growing trade surplus.

At the same time, unresolved tensions along the Thai-Cambodian border have kept checkpoints closed despite ceasefire talks, raising the risk of renewed clashes. Domestic political uncertainty during the election period has also continued to undermine investor confidence and delay business decisions.

Industrial data reflects the strain. Capacity utilisation stood at 58.21% in February, below the 60% threshold, while only 116 new factories opened in January and February, down 60.14% year-on-year. In contrast, 141 factories closed during the same period, marking a 58.43% increase and signalling slowing investment.

The situation has been compounded by the Middle East conflict, which has triggered an energy crisis and pushed up costs across the economy. Diesel prices had risen to 48.40 baht per litre, more than 60% higher than before the war, increasing production and transport costs for manufacturers.

Shortages of key raw materials, including plastic resin, chemicals and aluminium, have further strained operations. Prices for these inputs have risen by 10-30%, adding to the burden on businesses and contributing to expectations that economic growth in the first quarter will fall below 2%.

Kriengkrai warned that if the Middle East conflict continues beyond the 14-day ceasefire period, crude oil prices could remain above 100 to 120 US dollars per barrel. This would intensify cost pressures across supply chains, particularly as companies deplete existing inventories and face rising freight costs.

The Nation reported that if the Strait of Hormuz cannot reopen to normal commercial shipping, the impact could worsen, pushing industrial costs even higher. Product prices could rise by 8-10%, significantly increasing inflationary pressure in the second quarter and raising the risk of stagflation.

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Adapted by ASEAN Now Nation 15 Apr 2026

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It is what you believe. All kind of reasons why factories are closing in Thailand, but not one reason that can be linked to Thailand, such as political instability, expensive THB, outdated laws and bureaucracy and conservative attitude.

6 minutes ago, ikke1959 said:

It is what you believe. All kind of reasons why factories are closing in Thailand, but not one reason that can be linked to Thailand, such as political instability, expensive THB, outdated laws and bureaucracy and conservative attitude.

Also I have read many times that the Chinese open shops in different areas of the country and within a short period of time the Thai businesses competing with the Chinese shops lose so many customers that the Thai business closes down as the Chinese shops get their merchandise cheaper from their home country. This from my experiences and IMHO is the standard practice for the Chinese and now read that the Thais are moving more towards China than the US so it will probably only get worse for all until the US administration changes IMHO too.

The Federation of Thai Industries (FTI) should not hold back on being the partial reason for these closures.

Strongly promoting economic self-sufficiency and the use of renewable energy resources would help.

The FTI's pressuring governments not to promote or implement a clear air act (dues to the costs to industry) is not very intelligent.

Promoting the use of cheap foreign labour, not only brings in cheap foreign labour, which competes against Thai workers, but also opportunities of illegal enterprises and workers, which compete against Thai interests.

Pleasing the People's Republic of China may help Thai companies gain entry to China, but there is a big downside for Thailand, as the Thai auto industries are now discovering.

Then there is corruption and cronyism, which FTI never engages in.

Etc.

22 minutes ago, JimHuaHin said:

The Federation of Thai Industries (FTI) should not hold back on being the partial reason for these closures.

Strongly promoting economic self-sufficiency and the use of renewable energy resources would help.

The FTI's pressuring governments not to promote or implement a clear air act (dues to the costs to industry) is not very intelligent.

Promoting the use of cheap foreign labour, not only brings in cheap foreign labour, which competes against Thai workers, but also opportunities of illegal enterprises and workers, which compete against Thai interests.

Pleasing the People's Republic of China may help Thai companies gain entry to China, but there is a big downside for Thailand, as the Thai auto industries are now discovering.

Then there is corruption and cronyism, which FTI never engages in.

Etc.

IMHO Thais opening any business in China have to compete with the Chinese govt wages so would have a difficult time making money. China has more people than they know what to do with IMHO.

4 hours ago, Presnock said:

IMHO Thais opening any business in China have to compete with the Chinese govt wages so would have a difficult time making money. China has more people than they know what to do with IMHO.

May I humbly suggest that you look at CP's extensive and long-term business activities in China.

2 hours ago, JimHuaHin said:

May I humbly suggest that you look at CP's extensive and long-term business activities in China.

A Chinese-Thai owned and run with a lot of Chinese businesses, IMHO I don't need to say anything else. People can read and decide for themselves.