27-7-2023 (BANGKOK) Thailand’s manufacturing production index (MPI) dropped for the ninth consecutive month in June, decreasing by 5.24% YoY, more than expected, as sluggish global demand crimped exports amid an uncertain outlook for industry, said a ministry official. The drop was worse than the Reuters poll forecast of a 2.5% fall for June. Industrial goods account for about 80% of total exports, which have declined for nine straight months. The ministry previously forecast zero to 1% growth for the full year, but now expects the MPI to drop, according to Warawan Chitaroon, head of the ministry’s Office of Industrial Economics.
The output has been impacted by a global economic slowdown, although domestic consumption has increased due to strength in the tourism sector, the industrial ministry said. However, the delay in forming a new government after May elections is also expected to impact the manufacturing sector as it holds up measures to support industry and Southeast Asia’s second-largest economy. “The more delay, the bigger impact,” Chitaroon said. “The industrial sector has already been affected by slowing foreign orders while oil prices have not come down much.”
Thailand’s parliament postponed on Tuesday a vote for the next prime minister by the two houses of the legislature, as a political deadlock drags on more than two months after the election. The Federation of Thai Industries (FTI) is worried that the delayed government formation and political conflicts will hurt the economy in the second half of the year, slowing investment and denting foreign investor confidence.
The finance ministry has lowered its economic growth outlook to 3.5% this year from 3.6%, predicting weaker exports and smaller foreign tourist spending.
