Thailand’s manufacturing production sees steep fall due to car output drop
The Industry Ministry reported a year-on-year fall of 6.27% in Thailand’s manufacturing production index for December, attributed to a downturn in car production. This figure was notably steeper than the anticipated 3.2% decrease, according to a Reuters poll. This followed the 4.71% drop in November, rounding out a year in which overall output shrank by 5.11%.
In addition to the decline in automotive manufacturing, December’s fall in output was precipitated by a combination of high household debt, increased borrowing costs, and downgraded economic growth. By the conclusion of the third quarter of last year, household debt in Thailand had reached 90% of the gross domestic product (GDP).
Warawan Chitaroon, the head of the Office of Industrial Economics (OIE), cautioned about the state of the economy in January.
“There are more cautious signs in January, mostly economic concerns.”
The Finance Ministry reacted by significantly cutting its economic growth forecast for 2023, reducing it from 2.7% to a mere 1.8%. The forecasts for 2024 have also been adjusted downward, with growth expected to decelerate dramatically to 2.8% from the previously projected 3.2%.
The government has repeatedly emphasised the economic crisis and the urgent need for significant financial stimulus, relying heavily on its US$14 billion digital handout scheme as a key driver of recovery, reported Bangkok Post.
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.
