Manufacturing sector showing solid growth
Thailand’s Manufacturing Production Index, an important indicator of the health of the economy, rose over 4 percent year-on-year in October and is forecast to continue rising next year, as companies remain optimistic about the Thai economy and exports despite caution over possible slowdowns in some foreign markets in 2019.
The positive figures for October reversed a decline in September of 2.6 percent. September appeared to be an anomaly, however, as it was the first fall in the index in 17 months and was short lived. It was a reaction to an equally brief drop in exports that has also been reversed. Exports are rising again.
Manufacturing has been the most significant contributor to Thailand’s gross domestic product since the country began industrializing a half-century ago. Manufactured goods account for 86 percent of Thailand’s exports, and exports remain the most crucial driver of the economy, although consumption is starting to climb.
Aditad Vasinonta, deputy director-general of the Office of Industrial Economics, reported that automobile production grew 16.7 percent in October as new models were launched into the domestic market where sales have been increasing. Analysts believe vehicle sales will exceed 1 million units this year for the first time in five years.
Factory output of air conditioners and parts was 18.5 percent, petroleum and petroleum product production was up 9.8 percent, and sugar production made a massive leap of 145 percent on high crop yields.
The improvement in the manufacturing index corresponds to a rise in the Industrial Sentiment Index in October, according to the Federation of Thai Industries. The Federation attributed the increased optimism to confidence among companies that purchasing orders will be strong in the final quarter of the year, and better operating costs because of falling oil prices.
The Federation surveyed 1,207 companies in 45 industrial sectors to compile the index. Its executives said they expect the index will rise even further in coming months.
Aditad said the Office of Industrial Economics is predicting the manufacturing production index will increase by 2.5 percent in 2019. A driving force would be the government speeding up implementation of infrastructure development.
“Most megaprojects in the EEC (Eastern Economic Corridor advanced development zone) will announce winning bidders next February,’’ he said.
Those megaprojects include a high-speed railway linking three airports, a maintenance repair and overhaul center at U-Tapao airport, and the third phases of Laem Chabang and Map Ta Phut seaports.