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Thai factory output tumbles in May, reflecting poor exports
[BANGKOK] Thai factory output fell more than expected in May, fresh evidence that the junta has not been able to pull Southeast Asia's second-largest economy out of a rut.
The Industry Ministry said on Tuesday that May output dropped 7.6 per cent from a year earlier, the largest fall since March 2014. A Reuters poll forecast a 4.8 per cent decline.
Over the past two years, Thailand's factory production index has fallen every month, except in February, on a yearly basis.
Industrial goods account for over 70 per cent of exports, and the streak of output declines reflects how weak that traditional growth engine has been.
Exports fell in both 2013 and 2014, and the Thai National Shippers' Council said on Tuesday it will be a "miracle" if there's any increase this year. The central bank expects a third year of contraction for exports.
Thailand's other main growth engine, domestic demand, remains sluggish, dragging on the junta's efforts to move the economy ahead one year after seizing power to end political unrest.
Exports, equal to more than 60 per cent of the economy, slipped for a fifth straight month in May, and by more than expected.
Udom Wongviwatchai, a ministry director-general, said he expects output to turn positive late in the third quarter, and said the second-half level can be 3-4 per cent higher than a year earlier.
The central bank has lowered its 2015 economic growth forecast to 3.0 per cent from 3.8 per cent, citing poor exports. Growth last year was only 0.9 per cent.
Later on Tuesday, the central bank will release its indexes for private consumption and investment for May.
Thailand is a manufacturing and export hub for world's automakers, and car production fell 8.8 per cent in May from a year earlier while domestic car sales tumbled 18.3 per cent, according to the Federation of Thai Industries.
Hard drive output dropped nearly 20 per cent in May from a year earlier, according to the ministry on Tuesday, and production of television sets plunged 86 per cent.
Wattanapong Sirivadhanahul, senior vice president at S P Ceramic Collection Ltd, a ceramic manufacturer in Lampang, said it is "quite worried" as first-half sales were 25 per cent below target, due to weak exports to Europe, its main market. "We have delayed our production and investments because the current production line is not running at full capacity. This had delayed our decision to hire more workers," he said.