Thailand’s Manufacturing Sector Faces Challenges Amid Economic Slowdown

In September, Thailand’s Manufacturing Production Index (MPI) dropped 3.5% year-on-year, primarily due to weakness in the car and construction industries. The MPI for Q3 also saw a 1.2% decline, with capacity utilization at just 58.2%. Passakorn Chairat, Acting Director-General of the Office of Industrial Economics (OIE), cited factors such as sluggish domestic economic growth, low consumer purchasing power, and high household debt. A key contributor to the car manufacturing decline was a 23.4% drop in production, driven by tighter bank lending criteria for auto loans. Construction-related production, including concrete and cement, also saw a decrease due to fewer public and private projects. However, some sectors saw growth, such as the canned food industry, which surged by nearly 50% due to increased orders from the US, Canada, and Australia ahead of the year-end holidays.

Looking ahead to Q4 2024, Thai manufacturers face continued uncertainty, with global factors like the US presidential election adding to the complexity. The outcome of the election may impact trade and manufacturing dynamics, as different policies under a new administration could either help or hinder certain industries. Mr. Passakorn advised businesses to adapt to these challenges, particularly by embracing cleaner energy solutions to align with global sustainability efforts and reduce carbon emissions.