Thai Industrial Sentiment Declines in April amid Sluggish Demand and Govt’s Wage Increase Plan

The Federation of Thai Industries (FTI) reported on Wednesday that the Thai industrial sentiment index declined in April due to a combination of factors such as slowing domestic demand, a government minimum wage hike plan, and drought conditions.

According to the FTI, the industrial sentiment index dropped to 90.3 in April, down from 92.4 in the previous month. The federation highlighted that economic uncertainty had led to reduced consumer spending, and the proposed minimum wage increase would escalate costs, especially for smaller enterprises.

In response to the situation, the federation has urged the government to postpone the wage hike, citing the sluggish manufacturing sector and the struggles faced by over 3.18 million small businesses in managing escalating expenses.

The government’s initiative to raise the daily minimum wage nationwide to 400 baht ($11) starting October has been defended by Prime Minister Srettha Thavisin as a measure to support workers and stimulate economic growth. However, business associations have expressed opposition to the proposal, voicing concerns about its negative impact on the economy, competitiveness, and potential inflation.

The FTI also noted that the drought had affected agricultural manufacturing. Meanwhile, it also identified tourism as a positive contributing factor. Government data revealed a 39% year-on-year increase in foreign tourist arrivals to Thailand, reaching 13.16 million visitors from January 1 to May 12, with Chinese tourists comprising around 2.6 million of the total.

With an objective of attracting a record 40 million foreign visitors this year, following last year’s 28.15 million arrivals, the government aims to leverage tourism to boost economic growth amid challenging industrial conditions.