Bangkok: Economists are advising a revision of the Manufacturing Production Index (MPI) following conflicting signals from recent Thai economic data. Dr. Pipat Luengnaruemitchai, Chief Economist of Kiatnakin Phatra Financial Group (KKP), has highlighted contradictions in the country's economic indicators, suggesting that the traditional method of measuring the MPI may be outdated and not reflective of Thailand's evolving economic landscape.According to Thai News Agency, Dr. Pipat expressed his insights through a detailed analysis on his Facebook page. He emphasized that no single economic indicator currently provides a complete picture of the Thai economy, as each captures a different aspect of the rapidly transforming economic structure. The Purchasing Managers' Index (PMI) for the manufacturing sector showed a significant increase to 54.2 in July, indicating robust growth in activity. In contrast, the MPI registered a 3% decline in June, while the GDP for the second quarter grew by a modest 1.9%, trailing behind major Asian economies.Dr. Pipat explained that these indicators serve different purposes: the PMI reflects the direction of economic trends, the MPI measures production volume, and GDP calculates the total value added. Despite improvements in many factories, a decline in production in larger industries keeps the MPI in negative territory.The Thai economy is gradually integrating into global supply chains, particularly in emerging industries aligned with AI investment. These include sectors like hard disks, photonics components, and digital infrastructure. However, the rapid growth of these "winner" industries is overshadowed by the larger "loser" sectors facing structural challenges, such as the automotive and petrochemical industries.Dr. Pipat noted that traditional economic indicators might not adequately capture the changing economic dynamics. The shift towards industries with higher import content, like electric vehicles and data centers, impacts the value-added benefits reaching Thai consume rs. Despite strong export and investment figures, GDP growth remains low due to the high import content of new activities.To foster economic transformation, Dr. Pipat suggested reallocating resources from less competitive industries to promising new sectors. This shift is essential for advancing Thailand's industrialization and creating added value from emerging industries.
