BANGKOK- Thailand’s manufacturing production index dropped by a less than expected 0.85 percent in January from a year earlier, helped by government stimulus measures amid a continued slump in car output, the industry ministry said on Friday.
The MPI reading compared with a forecast fall of 2.55 percent for January in a Reuters poll and followed a downwardly revised annual drop of 1.8 percent in the previous month.
While the MPI contracted for a sixth successive month in January on a yearly basis, it rose 8.7 percent from December, the first monthly increase in three months, the ministry said.
“It is a good start to the year and we hope the industrial production index will expand throughout the year,” Passakorn Chairat, head of ministry’s industrial economics office, told a press conference.
Factory output is expected to rise in February as government stimulus measures are supporting confidence, investment and consumption, he added.
The ministry maintained its forecast for an output rise of 1.5 percent to 2.5 percent this year, after last year’s 1.79 percent drop.
Stronger exports and tourism, as well as the central bank’s latest interest rate cut are also supportive, Passakorn said.
The manufacturing sector, however, was still weighed down by a slump in car production, weak domestic consumption due to high household debt and increased competition from Chinese goods, the ministry said.
Car production in Thailand, a regional automaking center, fell in January for an 18th consecutive month, plunging more than 24 percent on a yearly basis.
Thailand is in early discussions with carmakers to introduce a car trade-in and scrapping scheme in a bid to revive an industry hit by its biggest crisis in decades.
Thailand’s economy grew less than expected into the end of 2024, data showed and analysts said hopes of an improving outlook for this year are clouded by concerns that the country’s export engine could be hit with US tariffs.
Southeast Asia’s second-largest economy grew 3.2 percent in the October-December quarter from a year earlier, up from a 3.0 percent pace in the previous quarter, the National Economic and Social Development Council (NESDC) said.
That missed the median forecast of 3.9 percent growth in a Reuters poll but was still the strongest annual rate in nine quarters.
On a quarterly basis, the economy grew a seasonally adjusted 0.4 percent in the October-December quarter, below the poll forecast of 0.7 percent growth and the 1.2 percent expansion in the prior quarter.
“The momentum of the economy is likely to slow down,” said Krungthai Bank economist Chamadanai Marknual.
“The government needs to quickly introduce measures to support industries, such as the automotive and real estate sectors, to stimulate the economy.”
The economy has lagged regional peers as it struggles under high household debt and borrowing costs, and sluggish demand from China, which is also a key tourism market.
Full-year growth came in at 2.5 percent, the NESDC said, faster than 2.0 percent growth in 2023, while the growth forecast for this year was unchanged at a range of 2.3 percent to 3.3 percent.
