The Federation of Thai Industries (FTI) index fell for the second consecutive month in May due to falling production capacity utilisation, in line with weak purchasing power.
The FTI chairman Chen Namchaisiri said the FTI index fell to 85.5 in May from 86.4 in April, largely due to concerns about the lack of recovery in both the global and domestic economies.
"The FTI index fell for the second straight month in May. This indicates that the economy has not yet recovered, with the most pressing concerns being weak demand and strong baht, which together are hurting Thai exports, a key contributor to the economy," said Mr Chen.
The FTI capacity utilisation index also fell to 53.6% in May, down from 65% in the previous month, said Mr Chen.
Businesses are demanding government assistance to help stimulate spending as well as measures to help stabilise the Thai baht to induce a boost in exports, which account for nearly 70% of the country's gross domestic product.
"We demand the government issue new measures to stimulate the local economy in the second half of this year to prevent further capacity utilisation contractions, that will in turn further exacerbate the economic slowdown," said Mr Chen. Exporters and private companies are still concerned about the appreciation of the baht, he added.
The baht, which has risen more than 5% so far this year, nudged higher yesterday, continuing its surge against the dollar, which has so far made it Southeast Asia's best-performing currency.
However, the Commerce Ministry has maintained its 2017 export growth target of 5% amid griping from some quarters in the export sector about the stronger baht, saying it has risen in the same direction as other regional currencies.
Apart from exports, Mr Chen said the FTI also expects the government to implement other policies to help support small and medium-sized enterprises and maintain other infrastructure projects, including the development of the Eastern Economic Corridor (EEC) so that the much-touted Thailand 4.0 model for the economy can actually materialise.
He said the private sector expects the EEC to play a major role in supporting the Thai economy.