In the early waves of June, forecasts were made by the office that projections for industrial GDP of the ongoing year would display a 0.0-1.0% increment. Similarly, the manufacturing production index (MPI) was also anticipated to demonstrate the same percentage growth. Despite such expectations, numerous challenging factors began influencing the manufacturing landscape of the country critically, prompting the Office of Industrial Economics (OIE) to revise its industrial GDP forecasts for the year 2023 to a sharp decrease ranging from 1.5% to 2.5%, and the MPI to a slip between 2.8% and 3.8%. This disheartening news was delivered by the director-general of the OIE, Warawan Chitaroon, last Thursday.
According to Warawan, the chief determiner amongst these influencing factors is the eroding purchasing strength of the agricultural sector. The sector has seen an average contraction of about 1.1% in recent months. An array of other detrimental factors like the slowdown of the global economy, financial woes of export partners, ongoing geopolitical battles, climate change’s detrimental effects on agricultural output and elevated prices of energy, plus increased interest rates were flagged by her. These factors have imposed an upsurge in the manufacturing expenses of Thai entrepreneurs, simultaneously causing a steep drop in the competitive viability of Thai goods in the global market.
Furthermore, the office made forecasts that 58.19% of the country’s aggregate manufacturing capacity would likely be exploited this year due to a falling demand in the worldwide marketplace. This figure comes up short when compared to the 7-month average of 2023, which was at 60.38%. However, there was a silver lining amidst these cumbers, the domestic economy, significantly propelled by the tourism industry boosts local consumption and spending. Thus, the OIE envisages that industries manufacturing for local demand will experience growth this year, albeit a smaller one by 0.7%.
In June of this year, the OIE also disclosed that private investment shrunk by nearly 2% when compared to last year’s numbers. Nevertheless, the office holds an unwavering confidence that political stability paired with a revival in the tourism industry during the end-of-year high season will instill a renewed consumer faith in the Thai economy. This, in turn, will stimulate an enhanced private investment.
Finally, the silver lining amidst all the bleak numbers were the industries that charted an escalating MPI in July. The auto industry led the pack with a 5.34% growth from the same period last year, followed by the petroleum refinery, which rose by 4.99%. Other high-fliers included the iron and steel industry, which expanded by 7.11%, sugar by 15.4%, and seasoning, which saw a significant uptick by 14.09%.
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