Thailand’s finance ministry raised its growth forecast for a second time this year after industrial output rose more than economists expected in May as supply constraints after last year’s floods eased.
The industrial production index rose 5.53 percent from a year earlier after a revised 0.1 percent contraction in April, the Office of Industrial Economics said in Bangkok today. The median of 11 estimates in a Bloomberg News survey was for a 2.5 percent gain. The agency had earlier reported that output increased 0.54 percent in April.
Improving manufacturing and higher-than-estimated exports in May could indicate that the recovery from the worst floods in almost 70 years is picking up pace. The finance ministry today raised its 2012 growth forecast to as much as 6.2 percent and said easing inflationary pressure will allow the central bank to hold the interest rate through 2012 as an economic slowdown in China and a deepening debt crisis in Europe temper the outlook.
“We will continue to see good growth in manufacturing and exports in the next few months as factories are catching up with pent-up demand after the floods,” Kampon Adireksombat, an economist at Tisco Securities Co. in Bangkok, said before the data release. “The spillover impact from the European crisis may kick in later this year.”
Exports rose 7.68 percent in May, boosted by higher auto and electronics demand. Toyota Motor Thailand Co. said June 19 the nation’s vehicle sales more than doubled to a record last month on new models, tax incentives and a recovery in production.
“The auto sector gave a big boost to overall manufacturing as companies sped up production of passenger cars and pick-ups to meet demand both for exports and the local market,” Sophon Pholprasit, the office’s director general, said at a briefing.
“The electronics sector hasn’t fully recovered yet as many factories haven’t finished installing new machinery after the floods,” he said, adding that the slower recovery in electronics and hard-disk drive output, as well as Europe’s debt woes may act as a drag on manufacturing growth. The office maintained a forecast for industrial production growth of as much as 7 percent this year.
Gross domestic product is estimated to expand by 5.2 percent to 6.2 percent this year, with a mid-point forecast of 5.7 percent, Somchai Sujjapongse, head of the fiscal policy office, said today in Bangkok. The finance ministry in March predicted the economy would grow about 5.5 percent this year.
The economy will expand by at least 3 percent in the second quarter, Boonchai Charassangsomboon, director of the finance ministry’s macroeconomics office, said today. Exports will increase 12.8 percent this year, he said, lower than its earlier forecast in March.
The Bank of Thailand will maintain borrowing costs at 3 percent for the rest of the year, the finance ministry said in a statement today. It had earlier said the key rate will rise to 3.25 percent by the end of the year.
The central bank this month cut its export growth forecast to about 8 percent from 9 percent, while maintaining its gross domestic product estimate at 6 percent.
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