Synopsis: The Federation of Thai Industries attributes the sharp decline to reduced cross-border shipments, slowed commerce, and disruptions to industries that depend on Thai-Cambodia trade.
The Federation of Thai Industries (FTI) Tuesday reported that the industrial sentiment fell to 86.5 points last month, following the border dispute with Cambodia, which caused a trade loss of 3.5 billion baht in June, an equivalent of $108 million.
The Thai Industries Sentiment Index (TISI), which dropped from 87.7 points in June to 86.6 in July, was announced by Kriangkrai Thienukul, Chairman of FTI, during a press conference in Thailand on August 19.
Kriangkrai said, “The decline was mainly attributed to escalating border conflicts between Thailand and Cambodia, which impacted economic activities and border trade, marking its lowest level in 36 months.”
He added, “In June this year, total trade value was 10,907 million baht ($335 million), dropping 32.29 percent from the previous month and falling 23.3 percent compared to the same period in 2024.
This decline, equivalent to a loss of around 3,522 million baht or roughly $108 million, reflects reduced cross-border shipments, slowed commerce, and disruptions to industries that depend on Thai-Cambodia trade.”
The FTI Chairman explained that industry confidence hit a three-year low, with the July TISI compiled from a survey of 1,356 FTI members across 47 industries nationwide.
Kriangkrai warned that sentiment is likely to decline further over the next three months due to the impact of US reciprocal tariff measures, which are expected to weaken Thailand’s competitiveness in global markets.
According to the survey, 70.1 percent of business operators were concerned about the domestic economy, 66.7 percent about the global economic situation, and 57.2 percent expressed worries over government policies.
The statement noted that the border conflict between the two neighbouring kingdoms has already had a severe economic impact, affecting trade, production and supply chains.
Other factors weighing on sentiment included delays in the budgets for this year and the following year, as well as concerns over the implementation of the 1.15 billion baht economic stimulus package worth approximately $35 million.
Meanwhile, Reuters reported that Thailand’s industrial sentiment declined for a fifth consecutive month in July, reaching a three-year low amid concerns over US tariffs and the border conflict with Cambodia.
It noted that the survey was conducted before Washington imposed a 19 percent tariff on Thai imports, while the tariff rates on transshipments through Thailand from third countries remain uncertain.
Speaking to Khmer Times, Kevin Nauen, Dean of the Faculty of Social Sciences and International Relations of Paññāsāstra University of Cambodia (PUC), said that based on survey or interview-based primary data collection, the TISI gives a measurement of how businesses feel about the prospects for demand, costs, labour and pertinent regulations.
“It provides a view into what they anticipate and what their actions are likely to be. Based on the large number of respondents and the scope of industries that they represent, the TISI gives a good indication that things are not looking good for the Thai economy,” he said.
Nauen explained that TISI in July showed a sharp decline for two reasons. “First, the longer-term context of concerns over US tariffs, flooding in the north, weakened purchasing power, delayed stimulus rollouts and stalled budget disbursements,” he said.
The PUC Dean continued that the more proximate cause of their bleak expectations is the border conflict, which has hit the economy with a combination of blows — disruption to trade and the loss of a huge amount of low-paid labour. “Investor confidence has been substantially eroded, and this was reflected in the index,” he said.
Nauen said that the TISI offered an early warning of investor moods, with a falling index as a sign of losing confidence. “In the short term, we may see further trade drop, as decreased production will follow from reduced orders and delayed plans.”
In the medium term, capital expenditures and investment will also be reduced, as caution increases, which may trigger expedited stimulus actions by the government, he added.
