Manufacturing production index dips in Thailand amid economic challenges

[webfact]

 

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.

 

by Alex Morgan

Photo courtesy of iStock

 

Source: The Thaiger 2024-03-02

 

- Cigna offers a range of visa-compliant plans that meet the minimum requirement of medical treatment, including COVID-19, up to THB 3m. For more information on all expat health insurance plans click here.

 

Get our Daily Newsletter - Click HERE to subscribe

 

[flyingtlger]

The current FX situation does not help....

[hotchilli]

The middle class were the majority of buyers of many products.

The middle class has been decimated in the last decade and finished off with the Covid policies of the junta.

With the middle class gone so have the purchases of goods, this in turn closes SME's and now the larger car manufactures suffer and of course their supply chains.

[Srikcir]

6 hours ago, webfact said:

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.

Just dreams and asperations.

Exports and Consumer Spending are the main sectors for GDP, tourism is a low value sub-sector. The PM recognizes more FTA's are needed to that end.

But with manufacturing slowing and domestic consumption dragging (in part due to years of unrestrained government debt increases and NPL's, Chinese product dumping), Thailand will need several years to make significant GDP gains, especially through new FTA's.

[trainman34014]

250,000 Cars seized last year and how many Homes ?   Thailand has a mega debt problem owing to the Banks and other Lending Institutions dishing out Loans to people who would never have the slightest hope of getting a Loan in the majority of Countries !