BANGKOK- Thailand’s manufacturing production index (MPI) in August dropped 7.53 percent from a year earlier, the industry ministry said on Thursday, as exports slowed amid soft global demand.
The figure compared with a forecast for a 6.5 percent year-on-year drop for August in a Reuters poll, and followed July’s 4.43 percent decline.
Output has been impacted by a global economic slowdown, the ministry said.
In the January-August period, factory output fell 4.95 percent year-on-year. Industrial goods account for about 80 percent of total exports, which in August unexpectedly rose 2.6 percent on-year.
The industry ministry last month cut its 2023 MPI forecast to a fall of 2.8 percent to 3.8 percent , from a previous forecast of zero to 1 percent growth.
Thailand’s 2023 economic growth and inflation are expected to be lower than previously forecast due to softer-than-expected exports and tourism spending, the central bank chief said.
Southeast Asia’s second-largest economy has been impacted by slowing global growth, a faltering recovery in its main trading partner China, and falling investor confidence due to prolonged political uncertainty after an election in Thailand in May.
Overall, the economic recovery remains intact, with 29 million foreign arrivals still expected throughout the year, Bank of Thailand (BOT) Governor Sethaput Suthiwartnarueput said.
The economy “is still in recovery, even though it’s weaker than expected”, he said.
“The recovery of tourism remains clear, although spending may not be much as expected,” he added. Tourism is a key driver, accounting for about 12 percent of GDP before the pandemic.
Updated forecasts due this week would see downward revisions to the earlier projection for 3.6 percent economic growth for 2023 and headline inflation of 2.5 percent, he said. Last year’s economic growth was 2.6 percent.
Thailand’s annual headline inflation rate was 0.88 percent in August, more than forecast but below the BOT’s target range of 1 percent to 3 percent. Sethaput said inflation would gradually return to the target range.
Fitch said in a statement that Thailand’s recovery could be constrained by a global slowdown, while the new coalition government’s economic stimulus policies could lead to higher government debt although it would support growth in the short term.
