Industry authorities are monitoring the negative impact of the world economy on Thailand for the next 1-2 months after the Manufacturing Production Index (MPI) in July fell for the second consecutive month.
Compared with July 2021, during which Thailand had few Covid-19 outbreaks, the MPI in July this year went up by 6.37% year-on-year to 95.71 points, said Industry Minister Suriya Jungrungreangkit, attributing the increase mainly to the reopening of the country.
In June, the MPI stood at 97.93 points, a drop from 98.19 points in May, according to the Office of Industrial Economics (OIE).
Siripen Kiatfuengfoo, deputy director-general of the OIE, said she expects domestic economic factors to remain positive over the next two months, with market demand gradually recovering and sentiment in the manufacturing sector improving following the government's easing of measures against Covid-19 in order to attract foreign tourists.
But global factors may affect the Thai industrial sector.
She said some of Thailand's trading partners may slow their purchase orders because of the impact of interest rate hikes by the US Federal Reserve and central banks in many countries as well as the protracted conflict between Russia and Ukraine.
There are fears that higher interest rates will lead to global economic contraction while geopolitical conflicts, especially the Russia-Ukraine war, may continue to put pressure on global energy prices and prices of key raw materials.
Thai exports still grew in July, with exports of industrial products, excluding gold, expanding year-on-year by 0.5% for 20 consecutive months.
Thai MPI continued to expand by 1.23% over the past seven months, with capacity utilisation standing at 63.4% in the same period. Mr Suriya remains optimistic the MPI will keep increasing in the second half.
According to the OIE, manufacturing of air conditioners and components in July expanded by 23.4% year-on-year due to higher demand in the global market.
Many countries placed more air conditioner orders due to higher temperatures, believed to result from climate change, said the office.