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Thai factory output set to rebound in second half: ministry

[BANGKOK] Thai factory output is expected to recover in the second half of this year after a long slump as private and public investment revive and the global economy improves, the Industry Ministry said on Thursday.

The industrial sector accounts for 40 per cent of Southeast Asia's second-largest economy, and the ministry's manufacturing production index fell every month, except February, on a yearly basis over the past two years.

Industrial goods account for the bulk of exports, which remain weak along with subdued domestic demand, dragging on the junta's efforts to revive the economy one year after seizing power to end political unrest.

"The output index should rebound in the second half," Udom Wongviwatchai, director-general of the ministry's Office of Industrial Economics, told Reuters.

"We believe that the index will recover in the third or fourth quarter this year because many negative factors such as the political factor has been eased already," he said.

In April, factory output fell a more than expected 5.3 per cent from a year earlier, the most for any month since June, and compared with a 1.7 per cent drop in March.

The ministry maintained its forecast for a 3-4 per cent rise in factory output this year, led by strength in the auto and electronics sectors. Output fell 4.6 per cent last year.

"The risk factors on the output index are linked with the global economic recovery, monetary policy rates, baht currency against other currencies, exports and household debt that may have an impact on domestic consumption," Mr Udom said.

The automobile sector accounts for 10 per cent of the economy, as Thailand is a regional vehicle production and export base for the world's top carmakers.

In January-April, domestic auto sales tumbled 15.3 per cent from a year earlier while car output rose 0.67 per cent, according to the Federation of Thai Industries.

Thailand's economy grew only 0.9 per cent last year. The government recently cut its growth estimate for this year by 0.5 per centage points to 3.0-4.0 per cent.