InfoQuest (March 25, 2020) -- Mr. Thongchai Chavalitpichet, director-general of the Office of Industrial Economy (OIE), revealed that Thailand's manufacturing production index (MPI) fell by 5.19 percent year-on-year in February to 99.9 points, mainly due to the impact of the global economic slowdown and drought, and the capacity utilization rate stood at 65.33.
The Covid-19 outbreak stimulated growth in some industrial sectors and an increase in the utilization of labor. The labor index rose slightly to 102.63 from 102.08 last month, up 1.88 percent from the same period last year. In particular, the production of almost all categories of food in the food industry increased, with the exception of the drought-affected sugar industry, which saw a decrease in the amount of sugarcane produced by factories, resulting in a year-on-year decline of 36.56 percent in production index, and the starch industry, which has run short of raw materials due to the outbreak.
The drop comes mainly from the sugar cane, automotive and engine industries, which have suffered from various external factors such as the US-China trade war and the drought.
The main sectors that continued to register sound growth in February included drugs and chemicals to fight the virus. Nearly all categories (except powder pharmaceuticals) grew by 40.37 percent year-on-year, largely because some manufacturers ran out of raw materials last month and had to accelerate production this month to complete delivery, coupled with lower-than-normal production last year caused by mechanical failure and water quality problems.
The frozen seafood rose by 26.55 percent year-on-year. All categories of products showed growth, especially frozen fish and minced fish, mainly driven by increased domestic demand during this period, as food hoarding becomes pervasive amid Covid-19 concerns.
Electronic components and circuit boards grew by 5.60 percent year-on-year, mainly due to the higher demand for these products, especially the printed circuit board assembly and printed wiring board (PCBA/PWB), in the global market compared with the same period last year after many years of sluggish growth. This sector is beginning to show an upward trend gradually.
Beer grew by 15.29 percent compared with the same period last year, mainly driven by the need to speed up production to store products as planned, to fulfill more orders from agents, and to speed up production in advance in order to prevent future production failure caused by Covid-19 outbreak.
Animal feed grew by 7.35 percent year-on-year as producers increased the number of market channels to sell products, which resulted in customer base expansion from individual farmers to large farms, in addition to export expansion.
The virus outbreak spurred a rise in product sales, with the shipment index increasing from 95.05 in January to 99.80 in February. This led to a reduction in the inventory, and the inventory index of finished products dropped from 145.51 in January to 136.80 in February. Overall exports of industrial products (excluding gold, arms and aircraft) dipped slightly by 2.10 percent from a year earlier, lower than the contraction of 4.47 percent in the same period last year. Manufacturers have slowed production pace to wait and see, but there is still ample capacity to meet demand if demand increases.
Source: InfoQuest, by Nisarat Wichiensri / Rachada, translated by Xinhua Silk Road.
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