Thailand's Manufacturing Production Index (MPI) continues to fall, declining by 3.91% year-on-year to 96.2 points in February, attributed to the combined effects of the country's high level of household debt and weak consumer purchasing power as well as the US's new trade policy, says the Office of Industrial Economics (OIE).
The indicator, which examines the health of the industrial sector, was at 98.9 points in January.
"We are facing global economic uncertainties, while in Thailand household debt remains high," said Passakorn Chairat, director-general of the OIE.
In the third quarter of 2024 Thailand's household debt tallied 16.3 trillion baht, accounting for 89% of GDP, said the National Economic and Social Development Council.
The debt overhang has been difficult to overcome, particularly for the automotive industry as car sales plunged with banks and car financing companies' using strict criteria to grant auto loans in order to avoid non-performing loans.
According to the OIE, a decrease in auto manufacturing in February was among the major factors causing the drop in MPI last month.
Auto production decreased by 12.7% year-on-year, resulting mainly from lower sales in the pickup and large and small passenger car categories.
US President Donald Trump's policy to increase tariffs on imports sparked uncertainty and concerns over the negative impact on international trade, said the OIE.
Another factor behind the decrease in the February MPI was a drop in oil refinery output by 7.8% year-on-year, following a halt in production for maintenance by some manufacturers.
Palm oil manufacturing fell by 28.5% year-on-year as palm harvests decreased as a result of drought.
However, the manufacturing sector still benefited from growing tourism and exports last month, said Mr Passakorn.
Exports of industrial products increased by 17.2% year-on-year, driven by higher demand for computers and peripheral products as well as air conditioners, he said.
An increase in foreign tourist arrivals also lifted sales of food and beverage as well as clothing.
The OIE said earlier it expects the MPI and GDP for the industrial sector to grow by 1.5-2.5% this year.
