Thai June factory output drops more than forecast amid weak exports
THAILAND’S factory output shrank more than expected in June, as sluggish global demand crimped exports amid an uncertain outlook for industry as political uncertainty after May elections drags on, a ministry official said on Thursday (Jul 27).
The manufacturing production index (MPI) dropped for a ninth straight month in June, down 5.24 per cent from a year earlier. June’s print exceeded a forecast in a Reuters poll for a fall of 2.5 per cent.
Factory output in Thailand has been impacted by a global economic slowdown, although domestic consumption has increased due to strength in the tourism sector, the Ministry of Industry said.
In the first half of 2023, factory output shrank 4.6 per cent year on year.
Industrial goods account for about 80 per cent of Thailand’s total exports, which have declined for nine straight months.
Warawan Chitaroon, head of the ministry’s Office of Industrial Economics, told a press briefing that the ministry now expects the MPI to drop for the full year, compared with a previous forecast of zero to 1 per cent growth.
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A delay in forming a new government after the election will also impact the manufacturing sector as it holds up measures to support industry and South-east Asia’s second-largest economy, she said.
“The more delay, the bigger (the) impact,” she 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 over two months after the election. The vote has been rescheduled for Aug 4.
Separately, the Federation of Thai Industries (FTI) said on Thursday that the sector 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 country’s finance ministry on Thursday lowered its economic growth outlook to 3.5 per cent this year from 3.6 per cent, predicting weaker exports and smaller foreign-tourist spending.
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