Bloomberg News

Thailand Manufacturing Output Decline Eases as Factories Resume Production

February 27, 2012

Thailand’s industrial output fell the least in four months in January as companies resumed operations and supply-chain disruptions eased after the nation’s worst floods in almost 70 years.

The industrial production index dropped for a fifth straight month, slipping 15.15 percent from a year earlier, after a 25 percent contraction in December, the Office of Industrial Economics said in a statement in Bangkok today. The median of five estimates in a Bloomberg News survey was for a 14 percent decline.

Southeast Asia’s second-largest economy may expand by as much as 6.5 percent this year on reconstruction activities after the floods, the National Economic and Social Development Board said earlier this month. The central bank cut interest rates in the last two meetings to aid recovery and cushion the impact of Europe’s debt crisis, which has hurt Asian exporters from Singapore to Taiwan.

“All companies are at full speed to rebuild after the floods,” Kampon Adireksombat, an economist at Tisco Securities Co. in Bangkok, said before the report. “We expect the manufacturing sector to return to normal as early as the second quarter.”

Capacity utilization rose to 58.48 percent in January from a revised 51.94 percent in December. The hard-disk drive, auto and electronics industries have shown an improvement after the floods, Aphiwat Asamaporn, deputy director-general of the Office of Industrial Economics, told reporters today.

Improving Trend

“The manufacturing trend is improving as more and more plants are resuming operations after the floods,” he said. “We expect the contraction to be smaller in the following months and the index may turn positive near the end of the second quarter.”

Western Digital Corp.’s two factories in Thailand will resume full production early in the second half of this year, Chief Executive Officer John Coyne said Jan. 16. Honda Motor Co. said Jan. 31 it has made progress in restoring its Thai facilities and expected to resume production by the end of March.

Thai exports in January rose 1.2 percent from a year earlier to $16.9 billion, while imports fell 0.2 percent, said Boonchai Charassangsomboon, deputy spokesman of the fiscal policy office, citing preliminary data from the Customs Department.

“The economy has bottomed out and is well on a path to recovery,” he told reporters today. The data showed a trade deficit of $600 million in January, he said, adding that the final numbers would be announced later.

To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net


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