Manufacturing downturn: Manufacturing production in Thailand persisted on its downward trajectory for the 16th consecutive month in January, according to the Ministry of Industry. The 2.94 per cent year-on-year (YoY) decline, although less severe than the projected 5.1 per cent drop in a Reuters poll, remains a cause for concern following December's 4.66 per cent decrease.

The continued slump was primarily attributed to a slowdown in auto production, which has now experienced six consecutive months of decline, impacting both domestic sales and exports. Major Japanese manufacturers like Toyota and Honda, which have significant operations in Thailand, were notably affected by this trend.

Warawan Chitaroon, the head of the Office of Industrial Economics, stressed that mounting household debt has been a significant impediment to production. Thailand's household debt, amounting to 16.2 trillion baht ($451 billion) or 90.9 per cent of GDP as of September 2023, ranks amongst the highest in the region. Additionally, the prevalence of illegal loan sharks amongst low-income families exacerbates the debt burden, trapping many individuals in cycles of high-interest debt.

Despite these challenges, the government has taken steps to address the debt situation while also leveraging inbound tourism and implementing policies to boost consumption in support of the economy.

The Ministry of Industry maintained its forecast that factory output would increase by 2 per cent to 3 per cent this year, following a decline of 5.11 per cent in the previous year. However, it was highlighted that the reported increase in exports by 10 per cent YoY in January, the highest in 19 months, was largely attributed to destocking rather than new production.

(With Reuters Inputs)