Thailand: Manufacturing production contracts for second consecutive month
August 31, 2012
In July, manufacturing output fell 5.8% over the same month last year, which, nonetheless, represented an improvement over the 9.6% contraction recorded in June. The decline, which marks the second consecutive drop in manufacturing output, exceeded market expectations of a 3.5% contraction and mainly reflected a sharp decline in electronics production, particularly in production of communication equipment. In addition, output of oil products deteriorated over the previous month. A month-on-month comparison confirms the slight improvement suggested by the annual figures, as manufacturing production dropped a seasonally adjusted 0.2% in July, well above the 8.9% plunge suffered in June. As a result of July's decline, the trend continues to point downwards, with the annual average variation in manufacturing output falling from minus 10.1% in June to minus 10.5% in July. Meanwhile, the Ministry of Finance expects the economy to expand 6.2%, whereas the Bank of Thailand revised its growth forecast for this year and now expects economic growth to reach 5.7%, below its previous 6.0% estimate.
Author: Ricardo Aceves, Senior Economist