Thailand Cuts Growth Forecast as Auto Production Plummets

The Ministry of Industry downgraded its 2026 growth forecast for the manufacturing production index to between 1.0% and 2.0%, down from a previous range of 1.5% to 2.5%. This decision follows a 0.8% year-on-year contraction in the index for May, marking the second consecutive month of decline and performing worse than analysts' predictions.

Driving this slump was a 17.94% drop in automotive production, with total output falling to 114,214 vehicles. The Federation of Thai Industries noted that export shipments plunged 26.69% to 59,434 units, primarily due to Middle East regional conflicts and stricter carbon-emission regulations. For the first time, production for domestic sales exceeded export production.

Domestic auto sales rose 10.6% to 57,765 units, led by demand for electric passenger cars and SUVs as fuel prices climbed. However, pickup truck sales remained nearly flat due to high household debt and strict bank lending standards. The broader manufacturing decline was further exacerbated by elevated inflation and rising energy and logistics costs. Despite these pressures, the Ministry of Industry cited government stimulus measures, rebounding international tourism, and strong industrial-goods exports as supporting factors for remaining output.