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Thailand: July manufacturing index rises on exports
The July manufacturing production index (MPI) rose 3.7% to 109.16, but its growth rate is still slower than the average the index posted in the first seven months of the year.
The tepid, but positive, showing was supported by hefty exports over the past few months, according to the Office of Industrial Economics (OIE).
The index’s overall performance so far in the year indicate that there are still risks, which may hamper MPI’s rise during the later quarters.
But MPI in the first seven months increased at a slower rate of 0.62% year-on-year, implying there are still risks ahead that could weigh on the index this year.
OIE director-general Veerasak Supprasert said the rise in July MPI was due largely to rising exports in several sectors, including automotive and auto parts, that lead to rising demand in other auto-related industries such as rubber and electronics.
“The July MPI is better compared to the same period of last year, when the country was hit by drought. We also have a lot of investment and business expansion this year that could lead to rising MPI for the whole year,” said Mr Veerasak.
Exports in July climbed 10.5% to US$18.9 billion (627 billion baht), shrugging off rising strength of the baht as demand for Thai goods rose as the global economy recovered, according to the Commerce Ministry.
Exports for the first seven months totalled $132 billion, up 8.2% year on year, the highest rate in six years, making the government revise this year’s annual export growth forecast to 7%, up from the previous forecast of 5%.
The Joint Standing Committee on Commerce, Industry and Banking is also about to raise its 2017 export forecast to more than 4%, up from the previous estimation of 3.5-4.0%.
Strong exports are expected to offset slow shipments in the first early months of the year.
“Exports started to rise sharply in the past few months, which would drive the MPI the rest of the year,” Mr Veerasak said.
The OIE is keeping the country’s 2017 annual MPI forecast unchanged at 1.0-1.5%, he said. The forecast is based on the country’s industrial GDP growth of 1.2%.
Mr Veerasak said the OIE expects the MPI to grow at an average of 1.55% a month during August to December.
Source: http://www.bangkokpost.com/business/news/1316751/july-manufacturing-index-rises-on-exports