Thai Industry Federation Warns Middle East War Undermines Business Confidence; Urges Government to Push Clean Energy
Thailand's industrial confidence index dropped to 85.3 in April due to elevated oil prices, Middle East conflict surcharges, and higher logistics costs, though tourism and private investment showed some strength.
Pimjai Leeissaranukul, president of the Thai Chamber of Commerce (TCC), revealed that the April 2025 industrial confidence index stands at 85.3, declining from 88.6 in March. The drop stems from multiple factors, including slower manufacturing output due to reduced working days during the Songkran festival holiday period, while global oil prices remain elevated. In April 2025, Brent crude averaged $120 per barrel, pushing diesel prices to an average of 45.32 baht per liter—a 33.2% increase from the previous month.
Simultaneously, the Oil Fuel Fund maintains a negative balance of 62 billion baht, forcing the Oil Fund Office to borrow an additional 20 billion baht, increasing financial burden. Raw material costs across multiple industries have risen, including plastic pellets, packaging, and construction materials, driven by higher energy prices, transportation costs, and logistics expenses that reduce business profitability. Shipping rates on major trade routes have climbed, particularly on the US West Coast route (up 5.7% month-on-month), while the Middle East conflict has triggered additional surcharges and insurance fees, further raising logistics and export costs.
Government investment spending disbursement lags behind schedule at 38.31% as of April 24, 2025, below the 45% target, slowing economic money circulation. However, April saw some positive factors, including Songkran festival activities that boosted tourism and domestic spending, generating over 30.35 billion baht during April 11-15, up 6% year-on-year.
The government has implemented relief measures for the transport sector, subsidizing diesel for non-scheduled trucks at 6 baht per liter between April 20 and May 31, 2025, easing short-term logistics costs. Private investment shows expansion trends, with Q1 2025 investment promotion applications valued at 1.02 trillion baht—2.4 times higher than the previous year—particularly in electronics, energy, agriculture, and food sectors.
Government oversight of domestic fuel distribution has helped address petroleum shortages and reduced disruption risks to transport and manufacturing. Additionally, Moody's upgraded Thailand's credit outlook to "stable," boosting investor confidence. The three-month industrial confidence forecast stands at 92.8, down from 95.9 the previous month, with concerns centered on the proposed 400 billion baht government borrowing decree, which may intensify pressure on public debt and long-term fiscal stability.
