BANGKOK (Reuters) - Thailand's manufacturing production extended declines for the 16th month in January, the industry ministry said on Thursday, as a key driver of the economic engine struggles amid weak domestic and export sales of motor vehicles.
The 2.94% year-on-year decline compared with a forecast 5.1% fall in a Reuters poll, and followed December's revised 4.66% drop.
The weakness was driven by a drop in auto production, which has slowed for the sixth consecutive month including domestic sales and exports, the ministry said.
Southeast Asia's second-largest economy is a regional auto assembly and export hub, home to Japanese manufactures like Toyota (NYSE:TM) and Honda (NYSE:HMC).
Soaring household debt has held back production, Warawan Chitaroon, head of the Office of Industrial Economics, told a briefing, as it affects overall domestic consumption and business investment decisions.
Thailand has one of the region's highest ratios of household debt, at 16.2 trillion baht ($451 billion) or 90.9% of gross domestic product (GDP), as at the end of September 2023.
Use of illegal loan sharks is rife among lower-income families unable to get bank loans, with many people trapped by debt with high interest rates.
The government is rolling out new measures to manage debt.
However, inbound tourism and government measures to boost consumption helped buoy the economy.
The ministry maintained a forecast that factory output would rise 2% to 3% this year, after a revised fall of 3.78% last year.
Industrial goods account for about 80% of total exports, which rose 10% year-on-year in January, the highest rate in 19 months.
Higher exports, however, did not constitute new production, because of destocking, Warawan said.
The government expects the economy to grow 2.2% to 3.2% this year versus 1.9% in 2023.