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UPDATE 1-Plunge in Thai April factory output shows continuing economy woes
May 28, 2015 / 5:47 AM / 2 years ago

UPDATE 1-Plunge in Thai April factory output shows continuing economy woes

(Adds details, comments)

* April output -5.3 pct y/y vs -2.0 pct in Reuters poll

* Ministry blames April holiday, weak global economy

* Output of TV sets, hard-drives falls

* April capacity utilisation 53.99 pct, March revised 63.64 pct

By Orathai Sriring and Kitiphong Thaichareon

BANGKOK, May 28 (Reuters) - Thai factory output tumbled more than expected in April, the latest evidence that the country’s key economic engines remain wobbly and the junta is struggling to move the economy forward.

With exports and domestic demand still weak, Southeast Asia’s second-largest economy has not regained traction one year after the army took power to end months of political turmoil.

The Industry Ministry said on Thursday factory output in April fell 5.3 percent from a year earlier, the most for any month since June. A Reuters poll expected a 2 percent drop.

In March, annual output slipped a revised 1.7 percent after February’s rise that ended a 22-month streak of declines.

Output data “remains a worrying sign”, said Thammarat Kittisiripat, economist at TMB Analytics in Bangkok, adding that domestic spending power, investment and exports all remain weak.

Thammarat said output may improve “slightly” in the fourth quarter on more manufacturing exports to the U.S.

Every April, Thailand has its Songkran new-year holiday.

Siriruj Chulakaratana, a ministry official, told a briefing the April output fall “was due to fewer working days as some firms had more holidays than last year while the global economy has not recovered yet”.

A decline in output was expected as exports slipped for a fourth straight month in April. Last month, industrial goods accounted for 78 percent of exports.

FALLING EXPORTS

Shipments, equal to more than 60 of economic output, are likely to shrink for the third straight year in 2015. Bank of Thailand Governor Prasarn Trairatvorakul said recently first quarter exports hit a “perfect storm”.

The Industry Ministry maintained its forecast for a 3-4 percent increase in factory output this year after a 4.6 percent drop last year.

Thailand is a manufacturing and export hub for global automakers, and car production fell 2.2 percent in April from a year earlier. In January-April, domestic car sales tumbled 15.3 percent, the Federation of Thai Industries said.

An index of television-set production fell 88 percent from a year earlier. South Korea’s LG Electronics Inc said in March it would soon shift its TV production in Thailand to Vietnam for logistical ease and efficiency.

Hard drive output fell 26.3 percent in April from a year earlier.

Thailand’s economy grew only 0.9 percent last year. The government recently cut its growth estimate for this year by 0.5 percentage points to 3.0-4.0 percent. (Additional reporting by Pairat Temphairojana; Editing by Richard Borsuk)

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