Thailand: Manufacturing output plummets in July
August 31, 2011
In July, manufacturing production contracted 1.1% over the same month last year, which contrasted the revised 3.8% expansion observed in June (initially reported: +3.3% year-on-year). The reading surprised private sector analysts on the downside, as they had anticipated that manufacturing production would accelerate to 5.0%. The main drivers behind the July contraction were sharp falls in manufacturing of communication equipment (June: +1.0% yoy; July: -14.3% yoy) and garments (June: -12.8% yoy; July: -20.0% yoy). A month-on-month comparison points to a much sharper deterioration than suggested by the annual figures, as manufacturing production swung from a 7.98% expansion in June to a 5.81% contraction in July. As a result of the July contraction, the trend continues to deteriorate, with annual average growth in manufacturing output falling from 1.5% in June to 0.8% in July, which represented the slowest pace since manufacturing production started to show positive growth rates in February 2010. Meanwhile, the Bank of Thailand expects the economy to grow 4.1% this year and 4.2% in 2012.
Author: Ricardo Aceves, Senior Economist