MPI falls in November amid global economic slowdown
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MPI falls in November amid global economic slowdown

Oil refinery closures also had an impact

Thailand's Manufacturing Production Index (MPI) fell in November by 5.6% year-on-year to 95.11 points, the lowest in 15 months, as oil refineries were shut down for maintenance while a global economic slowdown began to affect exporters, says the Office of Industrial Economics (OIE).

Officials expect the MPI for the whole year to grow by 1%, down from an earlier prediction of 1.9%.

"A global economic slowdown could lead to a recession, which will affect the Thai export sector," said Warawan Chitaroon, acting director-general of the OIE.

"Under these circumstances, only manufacturing for the domestic market will continue to grow."

In November, capacity utilisation increased to 62.6%, up from 59.8% in October.

During this month, car production continued to expand by 12.5% year-on-year, driven especially by demand for pickups.

Palm oil manufacturing also increased by 32.4% year-on-year as higher prices encouraged farmers to expand and take better care of palm plantations.

Air conditioner production increased by 9.5% year-on-year due to more overseas purchase orders.

The manufacturing of electronics and circuit boards expanded by around 3% year-on-year, driven by demand from integrated circuit and printed circuit board assembly businesses.

Beer production also increased by 14.9% year-on-year because of the tourism recovery.

The OIE expects the ongoing tourism recovery to drive the Thai economy next year. More tourists will help to boost the manufacturing sector.

The MPI in 2023 is expected to grow by 2.5-3.5%.

The Industry Ministry is closely monitoring the impact of the fuel tariff (Ft) hike, which will increase power bills for businesses during the first four months of next year when a global recession is projected.

Manufacturers have already had to deal with higher daily minimum wages and rising inflation.

Thailand is ranked third for the highest Ft rates in Asean, behind Singapore and the Philippines, according to the OIE. Previously Thailand was ranked fourth after Cambodia.

"This will cause Thailand to lose competitiveness, compared with that of neighbouring countries," said Mrs Warawan, adding that the government was aware of the impact and was working on ways to curb high electricity prices.

Domestically, a higher Ft rate will deal a blow to various industries, including steel and iron, cement, garments and textiles, as well as ceramics.

Micro-, small and medium-sized enterprises will be also seriously affected by more expensive power bills.

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