Household debt pressured the Manufacturing Production Index (MPI) in August, shrinking by 1.91%, with the PMI for the whole year revised down to a 1.0-0.0% contraction, while the industrial GDP contracted by 0.5% to 0.5% growth. It is recommended to keep an eye on the policy interest rate, the baht, the flood situation, the minimum wage increase, and the US election.
Mrs. Worawan Chitarun, Director of the Office of Industrial Economics (OIE), revealed that the Industrial Production Index (MPI) in August 2024 was at 95.08, a contraction of 1.91 percent compared to the same period of the previous year, and the capacity utilization rate was 58.30 percent, resulting in the first 8 months of 2024 contracting by an average of 1.55 percent and an average capacity utilization rate of 58.96 percent, while the export of industrial products (excluding gold, weapons, tanks, and combat aircraft) expanded by 8.1 percent compared to the same period of the previous year. Automotive production continued to decline for the 1
3th consecutive month due to household debt problems, financial institutions tightening lending and high loan rejections, as well as low-priced imported goods showing a tendency to increase, especially online shopping, which affected Thai entrepreneurs. At the same time, production costs increased in line with rising raw material prices, stable interest rates, and energy costs from diesel prices remaining high.
In addition, the flood situation in the North has disrupted travel, shipping, border trade and production. Some industrial factories have had to stop operations and tourism establishments in risk areas have had to temporarily close.
“From the MPI index figures for the first 8 months of 2024, it contracted by 1.55 percent, causing OIE to adjust the estimate for 2024, expecting the MPI index to contract by 1.0-0.0 percent and the growth of the industrial sector (GDP) to contract by 0.5 percent to expand by 0.5 percent, with factors to watch out for being the policy interest rate from the global economi
c inflation situation that has decreased, resulting in monetary policies in many countries starting to ease, the exchange rate from the baht tending to appreciate rapidly from the US interest rate decreasing, resulting in capital outflows to countries in the ASEAN region, including Thailand, which is expected to affect the export and tourism sectors that are currently expanding continuously and affect the manufacturing sector, especially consumer goods such as food, beverages, electrical appliances, and clothing, etc., including the flood situation affecting the spending of people in the area, and if the recovery after the flood occurs slowly, it will affect purchasing power and production in the region. In addition, the minimum wage that tends to increase to 400 baht per day will affect the production costs of entrepreneurs, and the US election may affect the determination of economic policies and international relations. Therefore, it is necessary to find a way to cope with possible changes in trade policie
s,” said Ms. Worawan.
Source: Thai News Agency