Business sentiment hit its lowest rate in 15 months in May, dampened by sluggish farm product prices, relatively low purchasing power, a slowing economy and political jitters.
The Thai Chamber of Commerce (TCC) confidence index, a gauge of nationwide business sentiment, fell for a third straight month in May to 47.4 points, down from 47.8 in April, 48.4 in March and 48.5 in February.
Thanavath Phonvichai, vice-president for research at the University of the Thai Chamber of Commerce (UTCC), said business confidence dropped in all regions for most of the same issues: the country's economic slowdown; sluggish farm prices that crimped regional purchasing power; the deepening US-China trade row's effect on export prospects; and the new government's instability.
The business sector in all regions was concerned about poverty, inequality, high cost of living and a possible flood in the ongoing rainy season.
"We are hopeful that the new government will come up with the new economic stimulus package worth around 50 billion baht to boost sentiment," Mr Thanavath said. "The government should also focus on the farm and tourism sectors in particular to boost economic performance in the second half of the year."
TCC members have been closely watching the policies of the new government led by returning Prime Minister Prayut Chan-o-cha.
Mr Thanavath said the business sector was also concerned about the new government's stability given the ruling coalition's slim majority in the lower house of parliament.
He said the economy will possibly grow less than 3.5% this year if the US and China fail to settle the trade talks, leading to higher tariff rates between the two countries.
The UTCC on May 16 lowered its GDP growth forecast to 3.5% from February's 3.8% view, blaming the deepening US-China trade row's impact on exports.
The cut was attributed to six key risk factors: the intensifying trade war between the US and China; China's slowing economy; baht volatility; domestic political conflict; relatively high non-performing loans at financial institutions and tighter lending approvals; and rising oil prices amid Middle East tensions.
Mr Thanavath said earlier that Thailand's economy was considered in a downward trend, primarily caused by the trade war. He cited merchandise exports showing signs of a slowdown since the fourth quarter last year; they are expected to stay sluggish until the third quarter.
The UTCC forecasts shipments to eke out 0.5% growth this year, down sharply from an earlier forecast of 3.9%, with imports falling 1.4% after a previous projection of 8.7% growth.