Thailand’s MPI growth faces stagnation amid export slowdown and high costs

The Manufacturing Production Index (MPI) in Thailand is predicted to experience subdued growth of 0-1% this year, owing to a combination of domestic and international business challenges. The April MPI reading was the lowest in 34 months, with an 8.14% year-on-year drop to 83.5 points, marking the seventh consecutive decline since October last year, according to the Office of Industrial Economics (OIE).

OIE director-general, Warawan Chitaroon, attributed the decrease to a slowdown in exports as purchase orders decline and the Songkran holidays, during which factories were closed for the festivities. In April, capacity utilisation decreased to 53.8%, down from 66% in March. She said…

“Other risk factors include banking problems in the US, which affected new orders of goods from Thailand. Thai manufacturers also struggle to deal with expensive electricity bills and high-interest rates which will increase costs and reduce competitiveness, eventually dealing a blow to exports.”

In light of the economic uncertainties, the OIE has downgraded its MPI growth target for the second time this year, from a range of 1.5-2.5%. In February, officials had reduced it from a projection of 2.5-3.5%.

Warawan said her office is closely monitoring the MPI in May, which is likely to be affected by negative factors, including the global economic slowdown, geopolitical conflicts, high household debt, and high-interest rates.

The industries that contributed to the growth of MPI in April included sugar manufacturing, which expanded by 19.1% year-on-year, driven by demand in the domestic and overseas markets.

Petroleum production also increased in April by 1.8%, thanks to more travel following the reopening of the country.

The manufacturing of malts and malt-derived alcohol increased by 17.5% year-on-year as the higher number of tourists and Songkran boosted domestic consumption.

The production of paper expanded by 11.4% year-on-year due to more demand for paper products used in the lead-up to the general election and the start of a new school semester, reported Bangkok Post.