Manufacturing production index dips in Thailand amid economic challenges

The Office of Industrial Economics (OIE) has reported a 2.94% year-on-year dip in the Manufacturing Production Index (MPI), falling to 99.2 points in January. This downturn is largely attributed to a range of economic challenges, most notably the highest level of car seizures in half a decade.

The domestic automotive industry’s stagnation was a significant contributor to January’s MPI decline, as OIE director-general Warawan Chitaroon explained.

“Car manufacturing decreased by 9.63% year-on-year as the number of seized cars rose to 250,000 last year, or around 20,000 units a month.”

This trend has led to banks exercising greater caution in granting car loans, adversely affecting domestic car sales.

Further impacting car sales was a decline in consumer buying power. January also saw a drop in car exports due to a scarcity of roll-on/roll-off ships, added Chitaroon.

Other factors undermining the MPI include elevated levels of household debt, curtailing consumer spending, and steep interest rates, which increase financial costs for entrepreneurs. Economic downturns among trading partners have also had a knock-on effect on certain domestic industries, noted Chitaroon.

The petroleum production sector saw a 6.4% year-on-year drop in January, with several oil refineries undergoing maintenance. The manufacture of electronic parts and circuit boards fell by 17.7% year-on-year, a result of the global electronics market’s sluggish recovery, reported Bangkok Post.

For the month, Thailand’s capacity utilisation stood at 59.4%.

Despite these challenges, Chitaroon remains optimistic about the 2024 MPI, projecting a 2-3% increase driven by anticipated export growth. Foreign tourism arrivals are also expected to boost the index, with a projected figure of 35 million visitors.

In related news, the Thailand Automotive Institute (TAI) is set to boost Thailand’s electric vehicle (EV) industry, constructing a test track to provide manufacturers with a range of testing services, subsequently becoming a new revenue stream for the country.

This track, under construction in Chachoengsao, is designed to facilitate a broad spectrum of tests including braking and parking brake performance, speed, distance and battery efficiency, as well as a skid pad. Kriengsak Wongpromrat, the president of TAI, an agency operating under the Industry Ministry, anticipates this facility will generate 1 billion baht annually.