The Thai Industries Sentiment Index (TISI) continued to fall in April to 85.3 points, down from 88.6 in March, attributed to the impact of the prolonged US-Israeli war with Iran.
Pimjai Leeissaranukul, chairwoman of the Federation of Thai Industries (FTI), said the dip was due to concerns over spikes in oil and raw material prices caused by the Middle East conflict, as well as worries about the government's slow budget disbursement.
Crude oil prices rose to US$120 per barrel in April, causing diesel prices to surge to 45.32 baht per litre, representing a 33.2% month-on-month increase.
Raw material costs across several industries continued to rise, particularly for plastic resins, packaging and construction materials, driven by higher energy prices, transport expenses and logistics costs, negatively affecting the profitability of business operators.
Mrs Pimjai said freight rates on major trade routes also increased, especially on the US West Coast route, which rose by 5.7% month-on-month.
Additional surcharges and higher cargo insurance premiums resulting from the conflict in the Middle East have increased logistics and export costs for businesses.
Moreover, disbursement of the government's investment budget remained delayed, with the disbursement rate at 38.3% as of April 24, below the target of 45%, resulting in slower circulation of funds within the economy.
Industrial production also slowed due to the extended Songkran holiday period, which reduced the number of working days.
However, there were positive developments in April, as the Songkran festival boosted domestic consumption and foreign tourist arrivals, generating an estimated 30.5 billion baht in revenue during April 11-15, up 6% year-on-year, she said.
Private sector investment showed signs of expansion, as reflected by investment promotion applications submitted to the Board of Investment in the first quarter this year, which totalled 1.02 trillion baht, a 2.4-fold increase year-on-year, particularly in the electronics, energy, agriculture and food industries.
The April TISI was based on a survey of 1,354 entrepreneurs across 48 industries under the FTI.
Businesses expressed heightened concerns regarding energy prices (84.6%), the global economy (80.6%) and the domestic economy (74.2%).
