Thailand’s Manufacturing Production Index (MPI) Contracts, but Positive Developments Emerge
Thailand’s Manufacturing Production Index (MPI) for May this year experienced a contraction of 3.14% compared to the previous month, according to the Office of Industrial Economics (OIE). Moreover, it dropped by 13.14% compared to the same period last year. The average MPI during the first five months of this year stood at 96.36, representing a drop of 4.49% compared to the same period last year.
However, despite the decline in the manufacturing sector, positive developments are visible in other industries. The expansion of the tourism sector has led to increased demand for industrial goods. Notably, automobile production saw a significant jump of 17.54%. The textile and garment industries have also shifted focus to speciality fabrics, boosting their export potential.
The expansion of the tourism sector has also influenced the demand for various products, such as sugar, frozen and chilled chicken, non-alcoholic beverages, meat and poultry products, seasonings, palm oil, dairy products, spirits, aquaculture products, and coffee.
Additionally, there was a notable increase in the production of passenger cars (26.1%) and pick-up trucks (12.9%), driven by a 12.30% surge in car exports compared to the same period last year.The OIE is closely monitoring the MPI for June, anticipating positive factors from tourism, private consumption, and the recovery of major trading partners like China and Japan.
However, the ongoing decline in exports, along with uncertainties surrounding Thailand’s next government formation, may affect investor confidence and the 2024 fiscal budget.
Moreover, the El Niño phenomenon, leading to below-average rainfall, may pose challenges for raw materials in the agriculture industry.
Amidst these developments, one industry to watch is the textile and garment industry, particularly in speciality fabrics. Entrepreneurs are encouraged to adapt their operations and focus on high-value products with growth potential. Speciality fabrics with properties like waterproofing, fire resistance, and disease-filtering can be further developed for medical and health-related equipment.
To reduce dependence on imports, emphasis should be placed on using domestically produced raw materials and promoting the new S-curve development policy in Thailand’s medical technology industry. This includes focusing on the production of technical fabrics with special properties to boost competitiveness and export potential for the Thai textile and garment industry.
The key industries that contributed positively to the MPI in May compared to the same period last year were automobiles (17.54%), other general machinery like air conditioners (12.57%), sugar (31.14%), motorcycles (22.11%), and basic synthetic plastics and rubber (2.98%). These expansions were driven by factors such as market demand, weather conditions, and increased production capacity.