13 industries see surge in factory openings despite economic downturn
Despite some reports of factory closures, the proportion of newly opened factories continues to expand
Thailand's industrial sector overall in June showed signs of slowdown. This is attributed to domestic factors, particularly declining industrial confidence stemming from the risk of drought affecting agricultural products.
However, Warawan Chitaroon, the director of the Office of Industrial Economics (OIE), said visa exemption measures in several countries are expected to boost tourism and the economy. At the same time, business confidence continues to improve.
Foreign factors indicate a short-term recovery, with the manufacturing sectors in the European Union and Japan showing potential for recovery.
From the analysis of the OIE regarding the opening and closing of industrial factories in the country, it was found that for the period from January to May 2024, despite reports of factory closures, the proportion of newly opened factories continued to expand.
This has led to increased investment and job creation, aligning with the continued expansion of capital goods imports, such as machinery and equipment, from the latter half of 2023.
Industries where the number of factory openings exceeds closures include the food industry, the chemical and chemical-products industry, the textile industry, the wood-processing and wood-products industry, paper and paper-products manufacturing, the beverage industry, the petroleum-products industry, the plastic-products industry, the non-metallic products industry, the basic metal industry, the metal-products industry, the machinery and mechanical equipment industry, and the electrical appliances and equipment industry.
This reflects that products from these industries remain in demand both domestically and internationally, with the primary focus on large and medium-sized factories producing goods with future growth potential.
Therefore, the government should accelerate investment promotion and coordinate with relevant agencies to establish measures that encourage investment for entrepreneurs, enhance production efficiency, and support the manufacturing of high-value products that meet changing consumer demands.
Regarding the Industrial Production Index (IPI) for May 2024, it stood at 98.34, contracting by 1.54% compared with the same period last year, with a capacity utilisation rate of 59.77%. The average IPI for the first five months of 2024 was 98.16, contracting by an average of 2.08%, with an average capacity utilisation rate of 59.30%.
The contraction in the IPI indicates that Thailand's industrial sector has yet to recover because of issues such as domestic purchasing power shortages, household debt, high interest rates, and rising energy costs impacting production.
Nonetheless, in May, total exports expanded by 7.2%, marking the second consecutive month of growth as economies of trading partners began to recover.
