BANGKOK: Thai factory output fell less than expected in July on strong growth in the auto sector, but a fifth month of persistently weak production will be a challenge for the new economic team tasked with revitalising Thailand's economy.
With exports and domestic demand sluggish, Southeast Asia's second-largest economy has failed to emerge from a slowdown in growth sparked by months of protests that paralysed the government and ended in the May 2014 coup.
The Industry Ministry said on Friday manufacturing output in July fell 5.3 percent from a year earlier, compared with a 5.75 percent drop seen in a Reuters poll.
Much of the manufacturing growth came from the auto sector, which expanded by 9.6 percent in July from the previous year, said Udom Wongviwatchai, head of the ministry's industrial economics office.
"The impact from changing new car models has faded and this has helped improved the overall production," Udom told a news conference.
Still, that wasn't enough to compensate for slow domestic demand, and a 21.79 percent fall in July in output of electrical appliances and electronics, Udom said.
"The domestic market is still falling due to low consumer spending...global demand for electrical appliance and electronics is still falling," he said.
Capacity utilisation in July rose to 58.74 percent from 57.09 percent in June.
In June, annual output tumbled a revised 7.7 percent, its biggest fall in 15 months. The index has fallen on an annual basis every month, except February, over the past two years.
A decline in output was expected after exports fell for a seventh straight month in July.
Thai exports, worth the equivalent of more than 60 percent of economic output, are expected to fall by 3.5 percent this year, according to the Finance Ministry. That would be the third consecutive annual contraction.
The Industry Ministry has kept its forecast for a 3-4 percent increase in factory output this year after a 4.6 percent drop last year. It plans to review its annual factory output forecast next month.
Thailand is a regional manufacturing and export hub for global automakers. Car sales fell 15.8 percent in January-July from a year earlier, according to the Federation of Thai Industries, which recently said it would cut its 2015 forecast for car sales again.
Thailand's economy grew only 0.9 percent last year. The national planning agency recently cut its 2015 economic growth forecast to 2.7-3.2 percent from 3.0-4.0 percent after growth was just 0.4 percent in April-June from the previous three months. - Reuters
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