BANGKOK, Aug 28: Thailand’s economy may not easily pull out of recession, data on factory output suggests, even as a retreat by foreign investors puts further pressure on its financial markets.
The fourth straight month of contraction in manufacturing output has raised fresh concerns that a slew of economic data this week will show more economic slippage, including a widening current account deficit as exports and foreign investments slow.The central bank’s data for July on Friday is expected to show consumption and investment remain subdued and the current account is in deficit again after a $3.8 billion gap in January-June.
Thailand’s economy slipped into a mild recession in the second quarter and is grappling with faltering exports as investors position for the US Federal Reserve to taper monetary stimulus, which has hit emerging Asia hard.
Pimonwan Mahujchariyawong, an economist at Kasikorn Research Center, said a weak baht should help boost exports and that the current account deficit should be around $3bn this year.
The baht was slightly weaker at 32.25 per dollar, taking its losses so far this year to 5 per cent. Thai stocks have slipped into bear market territory, falling 2.6pc on Wednesday and tumbling over 20pc from their May highs.
ING forecast in a report a current account deficit of $5bn in 2013, which would be the highest since 2005, and “the widening current account deficit makes Thai financial assets vulnerable to taper talk-driven turbulence.”
Industrial output in July dropped 4.54pc from a year earlier, hit by weak electronics and autos. It was worse than the median forecast of a 2.3pc fall in a Reuters poll, and against a 3.54pc decline in June.
On a monthly basis, unadjusted output fell 3.32pc in July after a 0.89pc rise in June.—Reuters
