Thai factory output falls in August

Factory output in Thailand fell in August due to lower automobile production, higher energy prices and flooding in the North, according to the Ministry of Industry, which now says a full-year contraction is possible.
The manufacturing production index dropped 1.9% in August from a year earlier, missing a forecast rise of 1% in a Reuters poll, after a revised annual increase 1.63% in July, according to figures released on Thursday.
Factory output for the first eight months of 2024 contracted by 1.55% from a year earlier, and the ministry signalled a full-year contraction was expected as it cut its 2024 forecast to a range between -1% and zero, from a range of zero to 1% previously.
“The forecast was revised downwards in line with overall GDP revision, with the index mainly contracting or not expanding at all,” said Warawan Chitaroon, director-general of the Office of Industrial Economics.
An influx of cheap Chinese goods, high household debt and high interest rates reducing spending contributed to the weak performance, she said, adding that September output was also expected to decline due to slowing consumption and flooding impacts.
The ratio of household debt to GDP in Thailand stood at 90.8% in March, among the highest in Asia.
On Tuesday, data showed automobile output was down 20.6% in August from a year earlier, falling for the 13th month in a row.
The auto industry, which accounts for about 10% of the economy, is facing twin challenges from falling domestic sales, as lenders tighten credit conditions due to consumers’ high debt levels, and a more competitive export market.
Exports overall in August were better than expected, with 7% growth in value from a year earlier, the Ministry of Commerce reported on Wednesday.
However, the ministry has cautioned that export growth could slow because of the recent rapid gains in the baht against the US dollar.
Commerce Minister Pichai Naripthaphan on Thursday urged the Bank  of Thailand to help manage the baht’s rapid appreciation and support exports.
The baht reached a 30-month high this week and is now trading around 32.70 against the dollar. Mr Pichai said a level of 35 was more appropriate.
“The Bank of Thailand should stop creating division and place the country’s interest first,” he said.
The minister, said the government understood the need for the institution to be independent but urged it to take a different tack.
“We respect independence, but it has to be an independence that helps the country develop and not get in the way of everything,” he said.
His comments were the latest salvo from the government ahead of a meeting next week between the finance ministry and central bank to discuss the inflation target and currency strength. The government is expected to again press its case for monetary easing.
The central bank’s next rate review meeting is scheduled for Oct 16.