The Thai Industries Sentiment Index (TISI) fell to 90.1 points in December last year, mainly due to a slowdown in the manufacturing sector and the impact of floods, says the Federation of Thai Industries (FTI).
The index stood at 91.4 in November 2024.
In December, factories churned out fewer products, following an increase in production in November to fulfil more purchase orders ahead of year-end festivities. The decrease in output also resulted from fewer working days in the final month of the year.
Floods were among the factors leading to a drop in the TISI. In mid-December, four southern provinces -- Chumphon, Ranong, Surat Thani and Nakhon Si Thammarat -- were ravaged by floods, which affected 43,595 households, according to the Department of Disaster Prevention and Mitigation.
The situation dealt a blow to economic activities in the southern region, said Kriengkrai Thiennukul, chairman of the FTI.
"Manufacturers also encountered higher operating costs as prices of agricultural products rose as a result of the impact of floods in the North and the North East in preceding months," he said.
This directly affected businesses that use farm produce as a raw material.
Product sales in certain industrial sectors were also stagnant as banks remained cautious about granting loans amid the uptick in household debt.
Buyers of construction materials faced difficulties in getting loans, following a slowdown in housing estate development projects, said Mr Kriengkrai.
Local manufacturers also struggled to deal with tougher competition in the market, driven by an influx of low-cost products from China into Thailand.
The December TISI was based on a survey of 1,372 entrepreneurs across 46 industries under the FTI.
The sluggish domestic economy was at the top of their list of growing concerns, gaining 56.3% votes, followed by global economic uncertainty (52.4%) and worries over domestic politics (40.1%).
Mr Kriengkrai suggested the government set up a war room to address the impact of the new trade policies of Donald Trump, who was sworn in yesterday as US president.
Authorities should focus on whether Thai exports will be affected and, at the same time, help entrepreneurs seek new opportunities to expand their market in the US.