Industrial GDP likely to shrink in 2023: OIE
The Office of Industrial Economics (OIE) on Thursday adjusted its estimation of the industrial sector’s gross domestic product (GDP), predicting it will contract by 1.5-2.5% due to decreasing demand in the agricultural sector and export markets.
Earlier in June, the office had estimated that industrial GDP for this year would expand by 0.0-1.0% while the manufacturing production index (MPI) would also expand by the same percentage.
However, due to several negative factors that have been affecting the country’s manufacturing, the OIE adjusted the industrial GDP estimation for 2023 to minus 1.5-2.5% and the MPI to minus 2.8-3.8%, OIE director-general Warawan Chitaroon said on Thursday.
She said among these factors, the leading one is the declining purchasing power of the agricultural sector, which has contracted by an average of 1.1% in the past three months.
Other negative factors include the global economic slowdown, financial problems of export partners, geopolitical conflicts, climate change’s impact on agricultural output, and high prices of energy as well as higher interest rates.
These factors have driven up the manufacturing cost of Thai entrepreneurs while diminishing the competitiveness of Thai products in the global market, said Warawan.
The office also estimated that 58.19% of the country’s total manufacturing capacity will be used this year due to declining demand in the global market. This number is lower than the 7-month average of 2023 of 60.38%.
However, as the domestic economy is largely driven by the tourism industry that helps boost domestic consumption and spending, the OIE predicts that industries that manufacture for domestic demand will still expand this year, by 0.7%
OIE also reported that private investment in June this year contracted 1.95% year on year.
The office is however confident that political stability and the recovery of the tourism industry during the high season at year-end will help restore consumer confidence in the Thai economy and therefore increase private investment.
Industries that reported an increasing MPI in July were: Automotive (5.34% expansion from the same period last year), petroleum refinery (4.99%), iron and steel (7.11%), sugar (15.4%), and seasoning (14.09%).
