Posted on 08 Jul 2009
The latest official figures, released in May, show that recovery of the Thai economy will be relatively weak in the coming months owing mainly to the powerful drag in some of the country's largest manufacturing sectors.
Yet several economic indicators for May suggested that
For May, the manufacturing production index registered a 1.2-per-cent decline month on month, while the utilisation rate also fell to 58.8 per cent, lending evidence to the end of an inventory liquidation, which started earlier this year.
For some sectors, there has been inventory restocking as shown by the electronics industry's output, which grew 1.9 per cent year on year in May, and food-processing, which was up 21.2 per cent year on year, according to the report.
These two industries account for 17.1 per cent of the country's output.
While such restocking in the electronics and food sectors provided an upside, the overall impact was insufficient to ease the hefty drag from bigger production slumps in other sectors.
For instance, the automotive industry recorded a staggering 43.3-per-cent drop in the output of vehicles, while the beverages sector saw a 16.8-per-cent year-on-year contraction.
As for electrical appliances, output was down by 17.9 per cent year on year, while iron and steel were down 29.7 per cent year on year.
For some of these industries, such as automobiles and auto parts, the domestic market is becoming more prominent, especially since overseas orders remain weak owing to the global recession.
The export volume continued to post a 2.5-per-cent month-on-month decline, while the extent of onshore demand weaknesses were measured by the 14-per-cent month-on-month drop in real imports in May, according to the report.
In other words, any solid recovery will depend very much on the revival of these major industrial sectors.
For May, a trade surplus of US$2.3 billion (Bt78.4 billion) was driven by the familiar import compression, which outpaced the decline in exports.
Manufactured exports, which registered a more-than-20-per-cent year-on-year decline in labour-intensive and hi-tech sectors, were mainly responsible for the powerful export drag.
Farm exports, which dropped 39.2 per cent year on year, have also made export contraction deeper during the month.
Consistent with vehicle production and other manufacturing industries that posted a weakness, imports of vehicles and parts as well as raw materials accounted for another month of severe import compression.
The contraction in both exports and imports was mainly volume-driven rather than a result of unevenly priced terms of trade, the report said.
The trade surplus supported a current account surplus of $1.39 billion in May and then led to a balance-of-payment surplus of $602 million during the month.
Net capital outflow in May amounted to $979 million, with a larger net outflow of $1.1 billion posted by the non-banking sector. This was due mainly to a net portfolio investment outflow of $1.59 billion.
Foreign direct investment stood at $703 million during the month despite a weak investment environment and broad-based manufacturing slack.
With regard to tourism, arrivals were down 22.2 per cent year on year, while farm production was down nearly 10 per cent. This meant a lack of income factors that could have boosted the domestic demand.
On unemployment, the rate of joblessness was higher at 2.1 per cent in April, while private consumption was down 4.7 per cent year on year in May.
Passenger-car sales plunged 18.4 per cent year on year, while real consumer imports and motorcycle sales dropped by 17.8 per cent and 30.5 per cent respectively.
The private investment index was down by 16.4 per cent year on year in May, slightly higher than that of the month before.
The government recorded a deficit of Bt36.7 billion in overall cash balance in May, while tax revenues declined by nearly 25 per cent year on year.
