Thai factory output beats expectations in January but car output slump weighs

THAILAND’S manufacturing production index (MPI) dropped by a less than expected 0.85 per cent in January from a year earlier, helped by government stimulus measures amid a continued slump in car output, the industry ministry said on Friday (Feb 28).

The MPI reading compared with a forecast fall of 2.55 per cent for January in a Reuters poll and followed a downwardly revised annual drop of 1.8 per cent in the previous month.

While the MPI contracted for a sixth successive month in January on a yearly basis, it rose 8.7 per cent 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 the 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 to 2.5 per cent this year, after last year’s 1.79 per cent drop. Stronger exports and tourism, as well as the central bank’s latest interest rate cut, are also supportive, Passakorn said.

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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 centre, fell in January for the 18th consecutive month, plunging more than 24 per cent 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. REUTERS