Thai SME and manufacturing economic distress

Small and medium-sized enterprises (SMEs) in Thailand are experiencing significant financial distress characterized by declining sales, rising operational costs, and high non-performing loan ratios. Data indicates SME sales have dropped by an average of 4% to 5%, with NPL ratios reaching 9.16%, well above the commercial bank average of 2.85%.

The manufacturing sector is particularly impacted, specifically within the automotive parts, garment, rubber, and plastic industries. In the automotive sector, the transition toward electric vehicles is creating structural challenges, while the garment industry faces intense competition from low-cost imports. Additionally, volatility in the Middle East has disrupted naphtha supplies, increasing production costs for rubber and plastic manufacturers by as much as 30% to 50%.

Temporary factory shutdowns have increased, affecting nearly 19,000 workers in June 2026. Many companies are utilizing the Labor Protection Act to implement these shutdowns while paying workers at least 75% of their wages. Industry groups, including the Federation of Thai Industries and the SME Federation, have warned that without government intervention—such as debt restructuring and low-interest loans—these temporary measures may escalate into permanent closures and widespread bankruptcies.