Thailand Business Confidence Declines Amid Middle East Conflict

Thailand’s Business Sentiment Index fell to 47.7 in March 2026, the lowest level in seven months, down from 49.6 in February, as sentiment was weighed down by the impact of the Middle East conflict. Total order books contracted (47.9 vs 52.2) and export conditions weakened (45.5 vs 48.2) while output prices went up (50.6 vs 49.7). The hotel and restaurant sector was particularly hit, with sentiment falling to an eight-month low, owing to cancellations of flight tickets and hotel bookings by Middle Eastern tourists, along with the suspension of direct flights from Middle Eastern airlines to Thailand. Also, the manufacturing index weakened, led by plastics pellets and packaging industries, as the closure of the Strait of Hormuz pushed energy prices higher, affecting transportation costs and imported feed stocks for plastic manufacturing, such as crude oil and naphtha. Also, the 3-month expected BSI dropped to 44.2, reflecting concerns over a potentially prolonged situation.

Thailand's business confidence indicator rose to 49.6 in February 2026, improving from a three-month low of 49.1 in the previous month. Sentiment strengthened for overall order books (52.2 vs 50.5 in January), investment (52.5 vs 51.4), and employment (50.8 vs 49.1). Meanwhile, sentiment weakened for performance (50.7 vs 51.3) and products (51.4 vs 52.4), while it deteriorated further for production costs (39.5 vs 39.7) and output prices (49.7 vs 49.8). By sector, the manufacturing index increased across nearly all industries, led by steel, which reported stronger demand from both domestic and overseas markets, particularly the US, and the electronics industry, supported by sustained growth in AI-related demand and data centers. The non-manufacturing index remained stable, despite a decline in retail trade, thanks to significant improvements in warehouse sector confidence. The three-month forward-looking sentiment index slightly eased to 52 from 52.3 in the previous month.

Thailand’s business confidence indicator fell to 49.1 in January 2026 from 49.8 in the previous month, marking the lowest level since October. Sentiment worsened on production costs (39.7 vs 42.4) and employment (49.1 vs 51.6), while optimism eased on investment (51.4 vs 51.8) and order books (50.5 vs 51.5). In contrast, assessments of performance (51.3 vs 49.9) and production (52.4 vs 51.4) improved. By sector, manufacturing fell across most industries, particularly in plastics and electronics as order books dropped amid US foreign policy uncertainty. Non-manufacturing activity also weakened across all sectors ahead of the new government formation, with total order books and services falling sharply. Hotels and restaurants were particularly affected due to the tourism low season and intensified regional price competition. The three-month forward looking sentiment index dropped to 52.3 from 54.4 in the previous month, marking the lowest level since September.