Thai manufacturing fell 11.25% in March, index shows
The Manufacturing Production Index (MPI) in March fell 11.25 percent on the same period last year, said Thongchai Chawalitpichaet, director-general of the Office of Industrial Economics (OIE).
The impact of the slowing global economy and drought also saw the MPI drop 6.63 percent in the first quarter of 2020 compared to last year. However, sales increased by 3.49 percent from the previous month in some industries, including processed foods, which have upped production to meet consumer demand during the Covid-19 crisis.
However, the pandemic has prompted the OIE to revise its economic forecasts across all sectors, including domestic consumption and overall exports. The OIE previously projected this year’s MPI would grow by 2-3 percent and industrial GDP by 1.5-2.5 percent. It has now reduced the MPI target by 6-7 percent.
The MPI for March rose by 1.87 percent from February. The capacity utilisation rate increased from the previous month to 67.22 per cent, while the MPI for the first quarter of this year rose 5.22 per cent on the previous quarter. Imports of capital goods in March contracted by 5.49 percent, while imports of raw and semi-finished goods (excluding gold) grew by 4.72 percent. The increase in imports of raw materials will lead to an increase in industrial production this month.
Industries that continued to expand in March included:
1. The hard-disk industry, which grew by 10.18 percent on the same period last year because of an increase in production and delivery orders after supply chain disruption in China and the closure of production bases in Malaysia and the Philippines, and increasing demand due to the global work-from-home policy, as well as manufacturers adjusting their production and shipments to maritime shipments due to reduced flights.
2. Air conditioners and parts, manufacture of which grew by 4.25 percent on the same period last year after more orders from Japan, Vietnam and Indonesia because competing countries lack production components while the domestic market is stable.
3. Processing and preserving of fruits and vegetables, which rose by 8.22 percent, mainly from coconut milk products for healthy demand and supply of coconut raw materials.
4. Production of medical drugs and chemicals, which expanded by 8.70 percent on the same period last year as medications and disinfectant were manufactured to address the Covid-19 crisis.
5. Frozen seafood production, which increased by 9.75 percent as manufacturers met rising domestic demand for frozen and minced fish products during the stay-home measures.
"Almost all sectors of the food industry have increased production – except for the sugar industry – due to rising demand from foreign countries, especially for ready-to-eat food. This caused food exports to expand for the first time in eight months, growing 0.8 percent in March," Thongchai said.
Meanwhile, among the main industries dragging down the MPI in March were sugar at -68.93 percent, due to drought which saw less sugarcane enter factories. Production of cars and engines fell 24.56 percent due to lower demand amid the economic slowdown in Thailand and around the world, as well as the effects of Covid-19. Petroleum distillation was down 8.68 percent due to the outbreak’s impact on tourism and travel after flights were grounded and demand for jet and diesel fuel slumped.
In the second half of the year, the OIE expects to see a resurgence of activity in the domestic economy as the Covid-19 outbreak has been relatively well controlled in Thailand. But it said the status of foreign economies that have been less successful in containing the virus would take longer to assess.
