Thailand’s manufacturing sector continues to show positive momentum on the back of reopening of economy

Thailand’s manufacturing production index (MPI) expanded by 14.52% year-on-year in August, thanks to the increase in the number of foreign tourists which boosted domestic demand, the Ministry of Industry said.

The MPI increased from 95.71 index points in July to 99.82 in August with a capacity utilisation (CapU) rate of 63.78% when compared to 60.77% in July.

For the first 8 months of 2022, MPI grew by an average of 2.72% year-on-year with an average CapU of 63.43%.

“We expects the MPI index to continue to expand from the government’s stimulus measures such as the measure to increase the budget for welfare card holders and Phase 5 of the half co-payment scheme which will contribute to the expansion of domestic demand,” said Industry Minister Suriya Jungrungreangkit.

Siripen Kiatfuengfoo, deputy director-general of the Office of Industrial Economics (OIE), said most industries expanded from higher domestic and external demands.

The industries with biggest expansion in August were automobiles, motorbikes and petroleum which expanded for 11 consecutive months.

The expansions of some major industries in August include:

  • Automobile production expanded by 63.37% year-on-year, mainly from the expansion in the production of pick-up trucks, passenger cars, and vehicles with diesel engines.
  • Production of petroleum products expanded by 17.6% year-on-year, mainly from the expansion in the production of diesel fuel and aviation fuel which was being supported by tourism recovery.
  • Production of air conditioners and parts expanded by 54.62% from higher external demand and production has resume to normalcy after the Covid-19 pandemic.
  • Production of electronic components and circuit boards increased by 15.61% year-on-year, mainly from the expansion in the production of integrated circuits which was being supported by higher external demand.
  • Motorbike production expanded by 131.01% year-on-year from the recovery of both internal and external demand.

“This shows that economic activities are recovering after the reopening of the country,” Siripen said.

She said a weak Bath was a boon for the export sector and it led to an 18 month consecutive expansion in the textile and garment industry.

Air-conditioner, electronic circuit board, food, plastic and chemical industries were also enjoying the positive impacts from the weakening baht, she said.

The total export of industrial products (excluding gold) increased by 9.04% year-on-year to US$18.21 billion in August, representing 21 months of consecutive expansion.

The imports of capital goods increased by 5.3% year-on-year while the imports of raw materials and semi-finished goods also increased by 5.3%, reflecting the increase in demand and production.

Inflation impacts on the manufacturing sector had declined where the Producer Price Index (PPI) for manufacturing products grew by 8.7% year-on-year in August, compared to 10.5% in July and 12.9% in June.

However, manufacturers are still concerned over the fluctuation in the global economic recovery, the rising of interest rates in many countries, the ongoing geopolitical conflicts in Europe and Taiwan, the slowdown of US and EU economies from the energy crisis and the slowdown of the Chinese economy because of a crisis in their real estate sector and Beijing’s Zero-Covid policy.

thailand’s manufacturing sector continues to show positive momentum on the back of reopening of economy