Thailand's Manufacturing Production Index (MPI) increased by 6.6% from December last year to reach 99.8 points in January, the highest level in 10 months, thanks to more business activity, driven by an uptick in tourism.
However, the January MPI decreased by 4.35% year-on-year due to the global economic slowdown and the impact of the Russia-Ukraine war, said the Office of Industrial Economics (OIE).
"We expect the MPI for the whole year to grow by 1.5-2.5%, with GDP growth in the industrial sector also standing at 1.5-2.5%," said director-general Warawan Chitaroon.
Officials earlier predicted MPI and industrial GDP would both grow within a range of 2.5-3.5%.
"The OIE revised down the projection because of an ongoing process to change the MPI calculation and concerns over the prospect of a global recession," said Mrs Warawan.
According to the OIE, capacity utilisation rose to 62.3% in January, up from 59.6% in December last year due to an increase in the production of goods to serve higher demand, driven by growth in the tourism industry.
Despite the bright prospect of a higher number of foreign tourist arrivals, the office warned of risk factors that could affect the country's economy.
Interest rates were tending to increase, resulting in more financial cost burden, and geopolitical conflict may cause a disruption in the industrial sector's supply chains.
Global crude oil prices are also a concern as Opec and its allies have maintained the oil production cut of 2 million barrels a day since November last year.
"Logistics costs will be affected by the cut in oil output," said Mrs Warawan.
According to the OIE, various industries played a key role in driving MPI in January.
Car manufacturing increased by 6.79% year-on-year, thanks to higher demand for passenger cars and pickups as well as an increase in the supply of semiconductors to automakers.
Pharmaceutical production ex- panded by 17.8% year-on-year, driven by a need for medicines to treat Covid-19 related illnesses and higher demand for drugs in tourist areas following the full reopening of the country.
Palm oil and sugar manufacturing also increased by 69.2% and 8.9% year-on-year, respectively, due to an increase in output.