In September, Thailand’s industrial sentiment index plunged to a 27-month low attributed to subdued domestic demand, the impact of flooding, and a robust baht, as reported by the Federation of Thai Industries (FTI).
The FTI disclosed that the industrial sentiment index declined to 87.1 in September from 87.7 in August. The weakened purchasing power resulted from high levels of household debt, leading to a decline in auto sales due to tightened lending criteria by banks, according to the FTI.
Exporters faced challenges due to the baht’s appreciation against the U.S. dollar, reaching its highest point in over 2-1/2 years, which has squeezed profit margins. Moreover, Thailand’s manufacturing industry has been affected by the influx of competitively priced Chinese imports, further impacting the sector, as highlighted by the FTI.
Since the beginning of the year, the baht has strengthened by 2.5% against the dollar, positioning it as Asia’s second-strongest currency following the ringgit. The FTI emphasized the importance of the Bank of Thailand maintaining the baht at suitable levels and aligning interest rates with the country’s economic needs.
The adverse effects of floods on various parts of Thailand have inflicted damage on the agricultural and industrial sectors, alongside tourist destinations, as noted by the FTI. The federation recommended that the government implement additional stimulus actions to mitigate the impact of the challenges faced by these sectors.
