Manufacturing Market 1H 2024

Market Overview

The Thai economy experienced a modest growth of 1.5% in Q1 2024, slightly down from 1.7% in the previous quarter, caused by a combination of global and domestic headwinds. In the first three months of 2024, Thailand's exports of goods and services rose by 8.1%, while imports picked up 9.4%, yielding a positive trade account. This positive trend indicated a significant improvement compared to the contractions experienced in 2020 and 2021 due to the global pandemic's impact on trade. Private consumption grew by 6.9% Y-o-Y in Q1 2024—an improvement from the 7.4% attained in the previous quarter—due to higher spending in service activities, particularly tourism. This surge in spending led to consumer confidence levels reaching an 18-quarter high. However, fixed capital investment declined by 4.2%, primarily due to a significant decrease in public investment. Consequently, Thailand's economy has lagged regional peers such as Malaysia and the Philippines due to high household debt and heavy reliance on tourism and trade.

In June 2024, headline inflation was low and stable at 0.62% Y-o-Y but turned negative for the first time in six months at -0.31% M-o-M due to lower power costs and falling prices of fresh vegetables and fruits. On the other hand, core inflation remained at 0.36% Y-o-Y, which was similar to the previous month. Despite the current low inflation, global crude oil price growth and regional conflicts could push inflation upwards. It's important to note that the headline inflation will be below the MPC's target range of 1.0 to 3.0 percent because of the ongoing decline in energy costs and stable food prices, but the potential for a rise in inflation should be closely monitored.

Due to the significant economic changes caused by the pandemic since 2019, Thailand's Manufacturing Production Thailand's updated its base year from 2016 to 2021, with 2021 data being more representative of the current economic conditions. In May 2024, the MPI declined slightly to 97.02, indicating that Thailand's industrial sector has yet to recover due to high household debt, elevated interest rates, rising energy costs, and labor shortages impacting production. Specific sectors, such as automotive manufacturing and petroleum products, have shown positive growth despite these challenges. At the same time, others like hard disk drives (HDD) and chemical products have experienced lower production levels. This overall performance highlights the complex dynamics affecting Thailand's manufacturing productivity during this period.

Read more the full report here