Manufacturing index dips on lower auto exports to Mideast

The average of the Thai manufacturing production index (MPI) in the first four months this year hit its lowest point in two years, largely because of the persistently sluggish global economic outlook and Thai exports, according to the Office of Industrial Economics (OIE).

Siriruj Chulakaratana, the OIE directorgeneral, said average MPI in the first four months this year fell by 0.1% to 111.94 from the same period last year, the lowest in 24 months.

April’s MPI fell by 1.7% year-on-year to 100.07, mainly because of falling exports in the auto sector, particularly to the Middle East, where the economy has been hit hard by falling oil prices.

“The automotive sector is slowing down, especially exports to the Middle East, which is a major market,” Mr Siriruj said. The long Songkran holiday period also dented the MPI.

Capacity utilisation in the industrial sector fell from about 60% in March to 53.6% in April, reflecting weak purchasing power in Thailand, Mr Siriruj said.

“The capacity utilisation rate also fell to the lowest level in two years,” he said. “However, the government is not very concerned, as this is considered normal for a global economic slowdown.”

The MPI for the automotive sector fell by 12.8% year-on-year, the drinks sector dipped 7.8% and the metal sector dropped 17.8%.

Average MPI should start to pick up in the third quarter as the government’s massive investment in infrastructure projects, particularly in the Eastern Economic Corridor, helps boost domestic demand and purchasing power, Mr Siriruj said.

Other infrastructure investment in the region such as the high-speed train from China to Laos could also lend support to the local economy, he said.

Despite weak demand in the international market, strong demand remains for Thai goods in Asean, particularly in Cambodia, Laos, Myanmar and Vietnam, which will help the Thai economy, he said.

The OIE expects a currency exchange rate of 35.50-36.50 to the US dollar and an oil price of $45-55 a barrel to help the economic recovery this year. It still sees average MPI growth for 2017 of 1-2%.