Thailand: Manufacturing production moderates the pace of contraction
March 31, 2012
In February, manufacturing production fell 3.4% over the same month last year, which represented an improvement over both the revised 15.0% contraction observed in January (previously reported: -15.2% year-on-year) as well as market expectations, which had manufacturing output declining 6.0%. Although the reading marked a moderation in the pace of contraction, it still represents the sixth consecutive fall in the index. The February drop continued to reflect a contraction in manufacturing of electronics. In contrast, manufacturing of motor vehicles showed positive growth for the first time in five months. A month-on-month comparison confirms the improvement suggested by the annual figures, as manufacturing production expanded a seasonally adjusted 9.0% over the previous month, which followed the robust 17.6% increase tallied in January. The trend suggests that growth in manufacturing output has touched bottom, with the annual average variation in manufacturing production remaining unchanged at January's minus 10.8%. That said, the recovery in the Thai manufacturing sector is expected to be protracted and, in fact, the Central Bank expects it to be delayed until the third quarter. Meanwhile, the Bank of Thailand expects the economy to expand 5.7% this year, which was revised from its previous 4.9% estimate.
Author: Ricardo Aceves, Senior Economist