Thailand's Manufacturing Production Index (MPI) decreased by 4.29% year-on-year in October to 89.4 points as people become more careful spending amid sluggish Thai and global economies.
The Thai economy has not fully recovered and interest rates remain high, said Siripen Kiatfuengfoo, deputy director-general of the Office of Industrial Economics (OIE).
The National Economic and Social Development Council previously cut its outlook for Thai GDP growth this year to 2.5% after a third-quarter gain of only 1.5%. On Wednesday, the Bank of Thailand's Monetary Policy Committee voted to maintain its policy rate at 2.5%, the highest level in a decade.
"Businesses face higher financial costs, while consumer purchasing power is weighed down by high household debt. Foreign tourist arrivals are likely to miss the government's target," said Mrs Siripen.
From January to October, the MPI decreased by 5.04% year-on-year to 93.8 points, while capacity utilisation was 59.5% during the period.
The OIE previously downgraded its projection for the 2023 MPI, expecting a contraction of 4-4.5%.
She said authorities are monitoring the impact of the global economic slowdown and geopolitical conflicts, especially the Israel-Hamas war, on the Thai economy, especially the export sector.
"Exports have improved, but are not yet healthy. The government has helped entrepreneurs curb their operating costs by reducing electricity bills and diesel prices," said Mrs Siripen.
She said the October MPI was driven by petroleum production, which increased 22.5% year-on-year because tourism drove demand for oil, including jet oil, diesel and gasohol.
Plastics and latex rubber manufacturing gained 12.5% year-on-year as factories resumed operations, following a shutdown for maintenance. The production of electric wires and cables soared by 43.8% for the period thanks to demand from the state and private construction projects.
Jewellery manufacturing increased by 19% year-on-year, driven by the tourism recovery, which led to greater purchases of rings, earrings and necklaces. Pulp, paper and cardboard production rose 19.2% for the period, in part because of lower raw material prices.