A beach town in Thailand

Thailand Industry October 2019

Thailand: Downturn in manufacturing output intensifies in October

Manufacturing production nosedived in October, contracting 8.5% year-on-year, down from September’s 5.1% fall. October’s print marked the steepest fall in output since December 2011 and suggests that economic growth will remain relatively muted in the final quarter of the year. A breakdown of the data showed that the steep drop in output was driven by a contraction in the manufacturing of food products as well as significant falls in the production of motor vehicles, trailers and semi-trailers; coke and refined petroleum products; rubber and plastics goods; and chemicals and chemical products.

Meanwhile, manufacturing output fell 0.4% in month-on-month seasonally-adjusted terms in October, up from the 2.7% fall in September. Annual average manufacturing production dropped 2.5% in October, down from a 1.3% contraction in September, which marked the strongest decline since January 2015.

Commenting on the result Prakash Sakpal, Asia economist at ING, noted that “weak manufacturing growth may appear consistent with more weak exports growth in October […]. But there is more to it than that.” In fact, Sakpal points to soft domestic demand dynamics as the main culprit. “This is also reflected by a double-digit decline in car sales in recent months”, Sakpal added.

To that end, the Thai government unveiled new stimulus measures on 26 November to the sum of USD 3.3 billion. Its effectiveness remains to be seen considering that the USD 10 billion stimulus package introduced in August has yet to boost demand. Moreover, the latest “data provides a strong reason for another rate cut at the December policy meeting. However, we don’t think the BoT will deliver a back-to-back cut, especially now that the government has unveiled more stimulus”, Sakpal noted.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest