The Digital Industry Sentiment Index dropped to 46.4 in the first quarter from 49.9 in the final quarter of 2020 after being weighed down by the pandemic and the troubling economic situation, says the Digital Economy Promotion Agency (Depa).
According to Depa's survey, the purchase of digital products and services by businesses and individuals has slowed as the economy has still not recovered.
Digital entrepreneurs have urged the Thai government to implement practical policies that could facilitate digital solutions as well as roll out measures to boost industrial competitiveness and investment.
The survey is conducted quarterly among 400 enterprises in the digital industry registered in Depa's database.
Nuttapon Nimmanphatcharin, president and chief executive of Depa, said the survey gauges confidence of digital businesses in performance, production capacity, trades and services, business management, employment, operations and manufacturing cost and digital projects.
The decline in the first quarter reflected a drop in purchases of digital products or services by the private sector because of the pandemic, he said.
In 2020, the index was 43.3 in the second quarter and increased to 49.8 by the third quarter.
The digital industry consists of digital services, software and software as a service, digital content, hardware and smart devices, as well as telecom.
Of these five, only digital services surpassed 50, with 50.6 in the first quarter.
This slowdown was attributed to the effect of previous lockdowns, which shifted customer behaviour towards online engagement instead of physical activity, Mr Nuttapon said.
"People tend to use more services on online platforms such as e-commerce, food delivery and digital content," he said.
Software recorded an index of 46.4, telecom 46.1, hardware and smart devices 45.8 and digital content 42.9.
This shows the lack of industrial confidence and how customers' purchase behaviour has become cautious, Mr Nuttapon said.
However, the index is expected to rise to 60.4 in the next three months, driven by demand for tech and digital services from people working from home, the trends of digital content consumption and online commerce, as well as the rollout of Covid-19 vaccines nationwide, he said.
"The digital industry's core demand is robust, and it wants policies that are practical and outcome-oriented to boost domestic and foreign investment in target industries," Mr Nuttapon said.