Thai industrial sentiment drops to 3-year low in July on US tariffs
Labourers work at a garment factory in Bangkok, Thailand, May 30, 2016. Picture taken May 30, 2016. REUTERS/Athit Perawongmetha/ File Photo
BANGKOK :Thailand's industrial sentiment fell for a fifth straight month in July, hitting a three-year low on concerns over the impact of U.S. tariffs and the border conflict with Cambodia, the Federation of Thai Industries said on Tuesday.
The survey was conducted before the United States set tariffs on Thai imports at 19 per cent, which was in line with regional peers. However, the tariff rates on transshipments via Thailand from third countries remain uncertain.
The tariff reduction from 36 per cent to 19 per cent has provided limited relief, with low-margin sectors like processed foods and agricultural products still vulnerable, FTI chairman Kriengkrai Theinnukul told a news conference.
"These sectors have margins below 10 per cent," he said. "They can't pass on higher costs to consumers."
"They may not survive for much longer. We hope the government will quickly support them with credit," he added.
The United States is Thailand's top export market and last year accounted for 18.3 per cent of total shipments, with a value of $55 billion.
The FTI said its industrial sentiment index dropped to 86.6 in July from 87.7 in June, and another index projecting sentiment over the next three months was also down, the FTI said.
Other factors weighing on sentiment included flooding in the country's north and weakening purchasing power, it said.
The border conflict has disrupted trade, and the farm sector has also been hurt by Cambodian workers fleeing Thailand, FTI said.
"We're aware of short-term impacts, particularly in agriculture, where farmers are struggling to find workers during harvest season. The government needs to intervene and provide immediate support," Kriengkrai said.
Separately, the cabinet approved a draft law on Tuesday to establish a national credit guarantee agency to help smaller firms secure loans.
The Bank of Thailand expressed concern on Tuesday about the rising bad debt and declining credit facing smaller businesses. Overall bank lending fell 0.9 per cent on an annual basis in the second quarter of 2025, with loans to small firms down 6.2 per cent.
