Latest news with #ManufacturingProductionIndex
Bangkok Post
30-07-2025
- Automotive
- Bangkok Post
Output ticks up for automobiles
Thailand's Manufacturing Production Index (MPI) increased by 0.58% year-on-year to 97.35 points in June, driven by the recovery of the car market, an increase in exports and state stimulus measures, says the Office of Industrial Economics (OIE). However, the MPI fell by 3.47% from May when it was 100.79 points. Car bookings at the 12-day Bangkok International Motor Show, which ended in early April, prompted car manufacturers to increase production to deliver cars to customers, contributing to the higher May MPI. Passakorn Chairat, director-general of the OIE, is upbeat about the MPI in June. "The increase in MPI reflected a positive sign for the manufacturing sector," he said. In June, car production increased by 17% year-on-year, driven by growing demand for hybrid electric vehicles and battery electric vehicles in the domestic and overseas markets. Mr Passakorn said this is a positive for car manufacturers struggling to deal with sluggish sales, caused mainly by buyers' difficulties in accessing auto loans as banks and car financing companies maintain strict lending criteria given the high level of household debt. According to the Bank of Thailand, household debt continues to decline, falling to 87.4% of GDP in the first quarter of 2025, attributed to weaker loan demand from borrowers and stricter lending standards from financial institutions. Household debt was 88.4% of GDP in the previous quarter. Other industries that contributed to the June MPI include electronic products and palm oil. Electronics and printed circuit board manufacturing increased by 6.18% year-on-year because demand rose for semiconductors and integrated circuits in the US market. Palm oil production gained by 9.84% year-on-year, driven by new purchase orders from China, India and Myanmar. Thailand's capacity utilisation rate was 59.6% in June. Officials continue to monitor the impact of the US's reciprocal tariff, household debt levels and the influx of low-cost imports on the Thai market as these incidents can deal a blow to the manufacturing sector, noted the OIE.
Bangkok Post
10-07-2025
- Business
- Bangkok Post
Are GDP forecasts reliable? An examination of models
As Thailand's economic outlook continues to be scrutinised, a growing debate has emerged over the reliability of GDP projections, particularly whether they reflect genuine domestic growth or are inflated by temporary trade flows. At the heart of the discussion is how Thailand calculates its GDP. Several private sector forecasting houses predict GDP growth for this year to tally less than 2%, more pessimistic than the Bank of Thailand's outlook. The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) recently voiced its disagreement with the central bank's forecast, which projects 2.3% growth this year, with the committee arguing it does not see a clear growth driver to support such optimism. The JSCCIB forecasts growth of 1.5-2.0% this year, with exports expected to contract between 0.3% and 0.5%, and inflation of 0.5-1.0%. In addition, the panel expressed concern over the appreciation of the baht, which has strengthened to 32.5 per US dollar, a level that is stronger than most other currencies in the region. The Federation of Thai Industries (FTI) called the 14.9% year-on-year surge in exports during the first five months of the year "inconsistent with reality", given that the Manufacturing Production Index has increased only marginally. Such export growth is likely to stem from transshipment, with Thailand used as a transit point for goods exported to third countries, especially exports to the US, which surged by 27% for the period, according to the FTI. During the first five months, imports from China increased by 29%. In light of these trends, the FTI has called for stronger measures to protect domestic producers and urged a reassessment of investment promotion policies. VARYING APPROACHES Youthapoom Charusreni, director of the macroeconomic modelling and forecasting division at the Fiscal Policy Office (FPO), said Thailand's GDP calculation follows international standards, with deductions made for imports and the subrogation of import rights of Thai-made products for export to third countries. According to Mr Youthapoom, both the Bank of Thailand and the FPO take a broader perspective in GDP calculation, using the expenditure approach, which analyses the economy based on overall spending in the system, including household and government consumption, domestic investment, tourism and services, and net export income, among other factors. In other words, even though the manufacturing sector has not fully recovered, the rebound in the services and tourism sectors could potentially serve as alternative drivers of economic growth, he said. Regarding the practice of importing goods and re-exporting them without undergoing any production process in Thailand, these transactions are recorded as export value, which may make export figures appear inflated, acknowledged Mr Youthapoom. An example is simply changing the label or repackaging the product without adding any real value while in Thailand. However, in GDP calculation only the "value added" within Thailand is counted. For instance, if an imported product is valued at 95 baht and is then re-exported to a third country for 100 baht, only the 5 baht of added value would be included in Thailand's GDP to reflect the actual economic activity occurring within the country. Therefore, even though export figures may rise based on the re-export of goods, the actual impact on GDP is "very limited" and remains controlled by precise calculation methods, he said. Mr Youthapoom said his comments reflect his personal opinion, not the official position of the FPO. UNCERTAIN FIGURES Adding further context, Nonarit Bisonyabut, a research fellow at Thailand Development Research Institute, said there is not much transshipment based on the empirical evidence. Mr Nonarit said for every 100 baht worth of exports, only about 1-5 baht is actually counted in GDP. However, when factoring in the re-export of goods, he said it raises questions about how extensive misrepresentations of Thailand as the country of origin might be. There are no concrete figures, but the Commerce Ministry has placed around 40 product groups on a watch list due to the likelihood of transshipment. The ministry has tens of thousands of Thai export product groups. The number of product types is relatively small compared with total exports, making it unlikely transshipment exports are significantly inflating Thailand's GDP, said Mr Nonarit.
Bangkok Post
10-07-2025
- Business
- Bangkok Post
Paopoom looks for more assistance from monetary policy
Thai monetary policy must "step on the gas" to help support the economy, which has been affected by US reciprocal tariff threats, says Deputy Finance Minister Paopoom Rojanasakul. He said monetary policy is not only about policy interest rates, but also includes measures such as credit distribution, injecting liquidity into the economic system or easing certain conditions to incentivise banks to lend. In the past, the Finance Ministry called for the relaxation of loan-to-value criteria, and eventually the Bank of Thailand did ease these conditions, although it took a long time for consideration. Regarding the responsible lending framework, Mr Paopoom said it may need to be reviewed for deployment during a more suitable period. He said a key fiscal measure is the 115-billion-baht stimulus package already approved by the government, which is expected to rev up the economy in the fourth quarter of this year and the first quarter of 2026. On June 24, the cabinet approved 481 projects worth 115 billion baht as part of a stimulus package expected to create 7.4 million jobs and lift GDP growth by 0.4 percentage points. Finance Minister Pichai Chunhavajira said earlier the government needs to implement stimulus measures as both domestic and international factors weigh on the economy, especially the global trade war and US tariffs, which dampen exports and reduce income. The key principles for the stimulus budget include: ensuring widespread distribution of funds, promoting employment and supporting projects with long-term impacts. Each investment project must have a minimum value of 500,000 baht, except for essential projects such as those in the tourism sector, which may be below that threshold. The investment period must not exceed 12 months and must be completed by Sept 30, 2026. According to Mr Paopoom, Thailand's economic outlook would be improved if not for the new US tariff proclamation of 36% for Thailand on Tuesday, as the local Manufacturing Production Index posted growth for two consecutive months after previously falling into negative territory. "The Trump tariffs are a major issue, but the final tax rate for Thailand remains uncertain," he said. In the latter half of this year, Mr Paopoom said both the Thai and global economies are expected to face increasing challenges, with the Thai economy forecast to decline in the second half compared with the first half. The Bank of Thailand forecasts economic growth of 2.3% for 2025, with a 2.9% expansion in the first half and a 1.6% increase in the second half.
Bangkok Post
05-07-2025
- Automotive
- Bangkok Post
Thai auto sector showing signs of recovery, minister says
Encouraging signs are emerging in Thailand's industrial sector, particularly in automotive manufacturing, which is showing a strong recovery after a prolonged contraction, according to Deputy Finance Minister Paopoom Rojanasakul. The government is beginning to see positive momentum in the automotive industry, which had been in decline for two years, Mr Paopoom said on Saturday. The country's Manufacturing Production Index (MPI) in May increased by 1.9% year-on-year, marking the second consecutive month of growth following nine months of contraction, he said. The automotive MPI rose by 12.7% — also for the second consecutive month — after turning positive for the first time in 21 months. Automobile production in Thailand rose 10.3% in May from a year earlier, with the first annual rise in 22 months helped by higher pickup truck output for export markets, the Federation of Thai Industries (FTI) reported earlier. However, for the first five months of 2025, output was still down 7.8% from a year earlier to 594,492 vehicles. Most industry leaders expect the full-year figure will also show a contraction. Domestic car sales (including pickup trucks) rose for a second month in May, up 4.7% year-on-year, though demand is still constrained because of high household debt and tougher screening of loan applications. Passenger car production in May surged by 22.1%, maintaining momentum after posting positive growth in April for the first time in a year. New passenger car registrations in May also grew by 8.7%. The pickup truck MPI in May grew by 5.2%, its first increase in 23 months. However, the pickup market requires additional stimulus as it has been affected the most by lending constraints, said Mr Paopoom. The Ministry of Finance has proposed a new programme that would offer tax reductions on new pickups to buyers who trade in their old ones. Meanwhile, the MPI for motorcycle manufacturing continued its growth for the third consecutive month, rising by 7.4%, in line with a 5% increase in domestic motorcycle production.
Bangkok Post
01-07-2025
- Business
- Bangkok Post
Manufacturing production index up for 2 months in a row y/y
The political risk that threatens to undermine the government should become clearer this month, indicative of whether the manufacturing sector will decelerate after the Manufacturing Production Index (MPI) rose by 1.8% year-on-year in May for a second consecutive month to 100.79 points, says the Office of Industrial Economics (OIE). The Constitutional Court is scheduled to convene on Tuesday to consider a petition submitted by the Senate in a bid to oust Prime Minister Paetongtarn Shinawatra over a contentious leaked recording of a phone call with Cambodian Senate president Hun Sen on the Thai-Cambodian territorial dispute. "The political problem has just started. Whether it will escalate or how the government will deal with it to prevent an impact on investment will soon be seen," said Passakorn Chairat, director-general of the OIE. Investment will hardly avoid the impact of growing concern over the government's stability as the premier is losing the trust of the public, Apichit Prasoprat, vice-chairman of the Federation of Thai Industries, said earlier. As of the end of May, the MPI grew steadily, driven by several factors, including car manufacturing, which increased by 12.8% year-on-year, and the value of exports, up by 18.4% cumulatively over an 11-month period. "Car bookings at the Motor Show prompted manufacturers to increase production to deliver cars to customers," said Mr Passakorn. Factories which sell products overseas also increased production to increase exports ahead of US President Donald Trump's reciprocal tariff of 36% on Thai imports, estimated to come into effect around July 8. In May, palm oil production soared by 25% due to more output and purchase orders from India, China and Myanmar. Sugar manufacturing also increased by 21% due to an increase in sugar cane as a result of an uptick in rainfall. Farmers also expanded their plantations because of higher crop prices. Capacity utilitsation stood at 61% in May, up from 56.6% in April. However, local air conditioner production fell by more than 10% year-on-year in May despite strong exports. This was due to a drop in domestic sales amid the rainy season and the import of low-cost air conditioners.
