Thailand's Business Confidence Recovers Amidst Lower Oil Prices and Stimulus Measures

Thailand’s business confidence improved across nearly every sector in June, supported by easing geopolitical tensions in the Middle East, lower energy prices, and a temporary boost in domestic spending from the government’s “Thais Help Thais Plus” stimulus program, according to the Bank of Thailand (BOT). The central bank’s Business Sentiment Index rose sharply to 46.1 in June, up from 42.5 in May, reflecting stronger confidence in manufacturing output, business performance, and new orders. However, the index remained below the neutral level of 50, indicating that businesses are still cautious about the overall economic outlook. Manufacturing confidence increased across all major industries, led by the automotive sector. Motorcycle manufacturers and auto parts producers, including engine component suppliers, reported stronger optimism as production and demand improved. Confidence also rose among chemical manufacturers as falling energy prices eased production costs. Many businesses have successfully diversified their sources of imported raw materials—including plastic pellets, packaging materials, and industrial inputs—helping improve profitability and production efficiency. Outside the manufacturing sector, retail trade recorded one of the strongest gains. Small and medium-sized grocery stores, along with retailers selling consumer staples such as beverages and cooking oil, benefited from higher household spending under the government’s “Thais Help Thais Plus” program, which temporarily boosted purchasing power. Wholesale businesses also reported stronger confidence, particularly those dealing in furniture, animal feed, and steel products, with improvements seen in sales volumes, operating costs, and overall business performance. Looking ahead, the Business Sentiment Index for the next three months rose to 48.0, reflecting improving expectations for profits and production costs, although confidence remains below the expansion threshold of 50. Retailers are expected to continue benefiting from government consumption support, while hotels and restaurants anticipate stronger bookings and higher customer traffic as geopolitical tensions ease and lower fuel prices improve travel sentiment. Manufacturing confidence is expected to remain broadly stable after recent gains. However, food and beverage producers are forecasting softer conditions due to seasonal factors, including lower palm oil production and the traditional off-season for beverage sales. Meanwhile, manufacturers of small electrical appliances expect stronger demand as companies launch promotional campaigns aimed at stimulating consumer spending in the months ahead.