Thailand’s manufacturing sector suffered a sharp setback in July, with the Manufacturing Production Index (MPI) tumbling 3.98% from the same period a year ago, according to data released Thursday by the Ministry of Industry.
The decline, the first in four months, pushed output to its lowest reading in nearly two years and significantly underperformed market expectations of a 1.1% year-on-year drop, as flagged in a Reuters poll.
The downturn was attributed mainly to a decrease in automobile manufacturing—the country’s industrial mainstay—which contracted by 11.39% in July compared with the previous year, marking its first negative reading in three months, data from the Federation of Thai Industries showed.
Besides automotive drag, officials highlighted tightening bank lending and eroding industrial confidence as additional headwinds. The broader economy is grappling with elevated levels of household debt and additional pressure from new U.S. trade barriers.
Since the beginning of the year, manufacturing output has slipped 0.7% year-on-year, prompting the ministry to pare back its forecast for 2025. Full-year growth is now anticipated between zero and 0.5%, down from an earlier projection of up to 1%.
After ramping up earlier this year ahead of U.S. tariffs, manufacturers have since been working through inventories and now appear to be in a wait-and-see mode, said Passakorn Chairat, director of the Office of Industrial Economics, during a press briefing. Businesses are keeping a close watch on trade policy developments to recalibrate production plans, he added.
Washington has imposed a 19% import tariff on goods from Thailand—lower than the previously feared 36%—bringing the rate in line with other regional exporters. However, ongoing uncertainty persists regarding potential tariffs on goods shipped through Thailand from third countries, fueling further caution among producers.
