NESDC flags ‘pass-through’ exports and import flooding as Thai factory output lags despite export boom

The National Economic and Social Development Council (NESDC) has outlined why Thailand’s export growth has not translated into stronger industrial production, pointing to “abnormalities” in the production system driven by several key factors.

Danucha Pichayanan, NESDC secretary-general, said that while exports have increased, the Manufacturing Production Index (MPI) and capacity utilisation have not risen as expected, indicating underlying problems. He cited five main reasons:

1. “Pass-through” export structure

Danucha said Thailand’s export growth may partly reflect goods merely passing through the country. Under normal conditions, if imports of capital goods and raw materials rise for domestic production, the MPI should jump into double digits, or at least rise by 3-5%. Instead, the MPI has not increased as forecast, suggesting some exports may be re-exported without going through substantial production or value-added processes in Thailand.

2. Import flooding

He said Thailand is still experiencing “import flooding”, with foreign goods flowing into the country at a notable level. One sign is that import growth has been almost as high as export growth — for example, in some months exports rose 12.6% while imports were up 12.4%. This suggests that part of what Thailand exports may be imported goods shipped onward, rather than products stemming from expanded factory output.

Danucha noted that in November, exports were valued at US$27,445.6 million, up 7.1%, marking the 17th consecutive month of growth. Imports, however, totalled US$30,172.5 million, up 17.6%, leaving Thailand with a trade deficit of US$2,726.9 million.

For the first 11 months of 2025 (January–November), exports totalled US$310,706.6 million, up 12.6%, while imports totalled US$315,662 million, up 12.4%.

3. Structural problems in traditional industry

Danucha said Thailand’s traditional industries are still undergoing structural adjustment. The country has relied on the same production model for a long time, while global technology has advanced significantly. Thailand also has higher labour costs than neighbouring countries, eroding competitiveness in older industries. Some Thai products are now being replicated by regional competitors. He said restructuring will take two to three years and must be pursued continuously so Thai products align better with global demand.

4. Weak links to new supply chains

Capacity utilisation has not risen to the 70–80% level partly because Thailand has not yet secured a complete supply chain for new industries such as semiconductors and smart electronics, leaving domestic production too weak to fully capture growth in the new era of global trade.

5. Impact on key sectors such as automotive

He said output in major industries such as automotive — a core pillar of Thai manufacturing — has not met expectations. One factor is high household debt, which has dampened domestic purchasing power and production for local sales. At the same time, export-oriented production has faced challenges, keeping overall capacity utilisation from recovering even as headline export figures look strong.