MPI downgraded, expected to stay flat

MPI downgraded, expected to stay flat

Thailand's manufacturing production index (MPI) in 2019 is expected to stay flat at 0-1%, a downgrade from a previous projection of 2-3%, says the Office of Industrial Economics (OIE).

The OIE cut the outlook after the July index dropped 3.23% year-on-year, blaming the downturn on the global economy and the US-China trade war.

The drop in June marked three months in a row of declines.

Ittichai Yotsi, the OIE's deputy director-general, said the country's output in July shrank for cars, auto parts, petroleum, steel products, rubber and electronic parts, which are core competencies of the country's industrial sector.

The decline in the global economy has pressured Thailand's consumer confidence and new purchase orders from overseas.

"For the petroleum sector, refinery production in July was affected by a temporary shutdown for operations maintenance," he said.

Liqueur products, air conditioners, palm oil, furniture and non-alcohol drinks remained in healthy production last month.

According to the OIE, the country's capacity utilisation was 65.7% in July, up slightly from 65.3% in June.

Mr Ittichai said global sentiment has pulled down the export sector while the baht's appreciation has lowered competitiveness.

"The baht has gained the highest level among export peers -- 4.9% year-to-date -- while Vietnam, South Korea and Malaysia have benefited from weaker currencies, losing 1.3%, 7.7% and 5%, respectively, against the dollar," he said.

"Some 46% of the country's industrial production goes to exports, so this sector cannot avoid a negative impact from global trade and economy."

But the OIE expects the government's stimulus package worth 316 billion baht will bring positive momentum to the economy in 2019-20. The office will evaluate results from the stimulus in the fourth quarter, said Mr Ittichai.

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