Thailand’s manufacturing production index falls for 17th time

The Office of Industrial Economics (OIE) disclosed that Thailand’s Manufacturing Production Index (MPI) has fallen for the 17th consecutive month. February saw a year-on-year decrease of 2.8%, bringing the index to 99.2 points. This slump is largely attributed to a drop in manufacturing within key sectors, including the automotive industry.

The OIE has also highlighted ongoing issues with high household debt and diminished purchasing power in Thailand, said Warawan Chitaroon, OIE Director-General.

“Domestic sales of pickups have slowed down, impacting the MPI considerably. This is largely due to banks enforcing stricter lending criteria for car loans.”

Continuing fears about non-performing loans have led banks to exercise greater caution when lending to prospective car buyers.

Warawan also noted that car production within the country had been in decline for seven successive months. In February alone, there was a 19.2% year-on-year drop. Manufacturing for domestic sales plunged by 26.3% year-on-year to 46,928 units, while export production dropped by 9.2% to 86,762 units.

The February MPI’s fall can also be attributed to an 18.6% year-on-year reduction in the production of electronic parts and circuit boards, as a result of diminished global demand.

Palm oil production also suffered, with a 27.2% year-on-year decrease due to drought conditions affecting palm harvests.

When considering all industries, the OIE noted that Thailand’s capacity utilization stood at 59.7% in February.

However, certain industries did see an increase in their MPI for February. Oil production rose by 7.5% year-on-year, driven by a boost in tourism that increased oil demand.

Chemical fertilizer and nitrogen compound manufacturing also saw a 39.8% year-on-year rise. This was attributed to effective marketing campaigns by sellers, along with higher prices for numerous farm products that increased farmers’ purchasing power.

The manufacturing of jewelry and gemstones also rose by 24.5% year-on-year, due to an increase in purchase orders from international markets.

Despite the overall decline in February’s MPI, the OIE remains optimistic about the index for the year, anticipating a growth of 2-3% due to the expansion of tourism and exports.

Officials are hopeful that the Thai economy will improve in the second quarter, primarily due to the allocation of the state budget. This has been delayed due to the protracted process of forming a coalition government post-election last year, reported Bangkok Post