THB: Weak output and energy shock weigh – Commerzbank

Commerzbank highlights that Thailand’s February manufacturing output was flat year-on-year, hurt by refinery maintenance and softer external demand linked to a strong Thai Baht (THB). Authorities have cut fuel subsidies and excise taxes as Oil prices surge, but fiscal space is constrained. The Office of Industrial Economics still projects modest 2026 output growth, subject to review due to the Iran War.

Manufacturing softness and constrained policy space

"February manufacturing production was weaker than expected and was flat on a yoy basis (Bloomberg consensus: 2.5%) vs 1.6% in January."

"The Office of Industrial Economics (OIE) expects output to recover this month as seasonal demand for home appliances is expected to pick up ahead of the summer holidays."

"OIE forecasts 2026 manufacturing production to be around 1.5-2.5%, but this will be reviewed in May due to the Iran war."

"The government has recently reduced the fuel subsidies for consumers and businesses."

"Given that government debt is approaching the legal cap of 70% of GDP, the government’s capacity to absorb higher energy costs is also constrained."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)