Thailand: Manufacturing output declines less sharply in December
January 31, 2012
In December, manufacturing production plummeted 25.8% over the same month the previous year, which followed the severe 47.2% plunge recorded in November (previously reported: -48.6% year-on-year), but overshot market expectations that had manufacturing output declining 30.0%. Manufacturing of electronic goods, as well as motor vehicle production, suffered the greatest declines, although the pace of contraction was slower than in the previous month. A month-on-month comparison confirms the improvement suggested by the annual data, as manufacturing production swung from a 23.5% contraction in November to a 37.9% expansion in December. The reading marked the first expansion after three consecutive drops. Owing to the impact of the floods that swamped about 10,000 factories and disrupted production in key industrial sectors, particularly the automobile and electronics sectors, manufacturing production declined 9.3% in the full year 2011, which contrasted the 14.4% expansion recorded in 2010. The 2011 result marked the steepest annual decline seen since 1998. Although the flood waters started to retreat in December, recovery in the Thai manufacturing sector is expected to be protracted, with the Central Bank predicting that a recovery in manufacturing output might be delayed until the third quarter, as the floods caused more damage to factories and supply chains than previously thought.
Author: Ricardo Aceves, Senior Economist