Friday, October 31, 2008

Thailand signals strong slowdown in September


The Thai economy showed signs of a clear slowdown in September, with exports and manufacturing production both down from the previous month, according to data released by the Bank of Thailand yesterday.

Amara Sriphayak, a senior director for the central bank's domestic economy department, said the US and global economic slowdown had a clear impact on Thailand, with third-quarter export figures clearly down from the first half.

Manufacturing production slowed as a result, while tourism revenues sunk due to domestic political instability.

But farm prices remained relatively strong, helping support rural incomes and economic activity.

Mrs Amara said the economy slowed in September from August, adding that the central bank now projected third-quarter growth to drop to 4% and fall even further in the fourth quarter.

The National Economic and Social Development Board is scheduled to release third-quarter growth figures on Nov 24. The economy slowed to 5.3% year-on-year growth in the second quarter from 6.1% in the first.

September economic figures showed declines across a number of areas, with the manufacturing production index slowing to 4.6% growth from 7.6% the previous month. Industrial capacity utilisation also dropped to 68.2% in September from 70% the previous month.

Export-oriented industries posted a sharp slowdown in activity, with growth of 8.8% year-on-year in September compared with 16.4% the previous month.

The decline was in line with the overall slowdown in exports, which totalled $15.6 billion for the month, up 19.5% year-on-year but down from $15.78 billion the previous month.

Imports also fell to $15.5 billion in September, up 38.6% year-on-year, from $16.46 billion the previous month. The trade account returned to a surplus of $142 million in September compared with deficits the two previous months, although the current account remained in deficit overall at $703 million.

"The greatest concern for the economy right now is the fact that export shipments in the third quarter fell to 9.1% growth compared with 12.1% in the previous quarter," Mrs Amara said.

"The slowdown should be even faster in the fourth quarter, and this is a clear sign that the global crisis is having an impact on overseas orders."

Inbound tourists totalled just 900,000 in September, a 16.5% decline from the year before, as foreigners cancelled trips as headlines centred on the seizure of Government House by the People's Alliance for Democracy and the temporary closure of provincial airports.

Farm income also dropped to 45.5% growth year-on-year in September from 57.5% the previous month. Mrs Amara said high farm incomes supported rural consumption as motorcycle sales grew.

But private investment remained weak, with growth of just 0.5% in September from the previous month.

Fiscal spending had less of an impact on growth than earlier forecast, with disbursements for the fiscal year ending September reaching just 92.3% of the budget compared with a target of 94%.

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