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Manufacturing Index Tells Bleak Tale of First-half Drop

By on Jul 29, 2015 in Industrial, Property News

The weak economic outlook and poor export performance have hurt Thailand’s industrial sector, causing the manufacturing production index (MPI) to drop for a fourth straight month in June to the lowest level in 15 months, says the Office of Industrial Economics (OIE).

Director-general Nattapol Rangsitpol said the MPI fell 8% last month year-on-year after a 7.6% contraction in May.

The decline was driven largely by lower production capacity in segments such as hard disk drives, automotive, electronics and drinks including beer, with demand drying up both at home and abroad.

“Industrial capacity in the first half stood at 58.8%, down slightly from 60.6% in the same period last year,” Mr Nattapol said. “But we’re still concerned about how the MPI will be in the second half of this year, as the economy is unlikely to recover fully.”

According to the OIE, first-half exports fell by 3%, while imports rose by 2.7%.

Electronics exports fell by 17.5% year-on-year in the first half due mostly to a weak global economic outlook that cut demand for tablets, notebooks and other devices.

“Major investors that move their production base from Thailand to Vietnam such as Samsung will also be a negative factor leading to a drop in production capacity in the electronic sector this year,” Mr Nattapol said.

The OIE remains concerned the Samsung withdrawal could influence other companies as they mull investing further in Thailand or decamping to lower-wage countries.

Several Thai industrial sectors have been severely damaged by the weak global economy, with exports suffering from falling orders caused by weak demand and poor purchasing power.

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Source: Bangkok Post – 29 July 2015

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