Thailand’s car production fell 8.8% in May from a year earlier as domestic sales tumbled 18.3%, according to the Federation of Thai Industries.
Reuters/Bangkok
Thailand released weak May factory output data and tepid investment and consumption indexes that provide fresh indications the junta has not been able to pull Southeast Asia’s second-largest economy out of a rut.
The industry ministry said yesterday that May output dropped 7.6% from a year earlier, the largest fall since March 2014. A Reuters poll forecast a 4.8% decline.
Over the past two years, Thailand’s factory production index has fallen every month, except in February, on a yearly basis.
The Bank of Thailand (BoT) unveiled May numbers that included a 1.3% rise from April for its private consumption index but a 0.5% slip in private investment.
Domestic demand and exports are Thailand’s main growth drivers, and neither has fired well for a long time. Growth was only 0.9% last year, and the central bank has cuts its 2015 forecast to 3% from 3.8%.
In May, economic recovery “continued to be slow and fragile,” the BoT said, adding that merchandise exports “remained sluggish and private spending softened”.
Industrial goods account for over 70% of exports, and the output declines reflect how weak shipments have been. In 2013 and 2014, exports fell and the Thai National Shippers’ Council said yesterday it will be a “miracle” if there’s an increase this year. The central bank expects a third year of contraction.
Exports, equal to more than 60% of the economy, slipped a fifth straight month in May, and by more than expected.
Udom Wongviwatchai, a ministry director-general, said second-half output can be 3%-4% higher than a year earlier.
Thailand is a manufacturing and export hub for world’s automakers, and car production fell 8.8% in May from a year earlier while domestic car sales tumbled 18.3%, according to the Federation of Thai Industries.
Hard drive output dropped nearly 20% in May from a year earlier, according to the ministry, and production of television sets plunged 86%.
Wattanapong Sirivadhanahul, senior vice president at S P Ceramic Collection, a ceramic manufacturer in Lampang, said it is “quite worried” as first-half sales were 25% 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.
