Thailand reported small increases in factory output, private investment and consumption in May, but the country’s recovery remains fragile with declining exports a big drag on the trade-dependent economy.
Some May numbers released yesterday could give some encouragement that the economy is on a better footing after years of sluggish exports and domestic demand.
Factory output rose 2.6% from a year earlier, the Industry Ministry said.
That was more than the 1.85% increase forecast in a Reuters poll, and a third straight month of expansion.
The Bank of Thailand (BoT) released indexes that showed May private consumption rose 1.1% from April and investment increased 0.4%.
The economy in May expanded steadily from the previous month, helped by public spending, tourism and slightly improved domestic demand, the BoT said in a statement.
But the outlook for exports, which have fallen in each of the past three years, remains gloomy.
Shipments are worth about two-thirds of Thai gross domestic product.
“The overall economy would remain weak as long as export demand remains weak, which is probably for the rest of 2016,” said Jack Chambers, senior economist at Moody’s Analytics in Sydney.
The Thai National Shippers’ Council yesterday changed its forecast for 2016 exports, now seeing a 2% contraction.
In March, it forecast 0-2% expansion.
Yesterday, it said soft global demand and exchange rate volatility mean “there is no chance of rising exports” this year.
The central bank, which forecasts a 2.5% drop for the year, said exports in May fell 3.7% from a year earlier after April’s 7.6% contraction.
Finance Minister Apisak Tantivorawong told reporters the country had very little private investment.
“The government has done a lot with investment but that has only shored up the economy,” he said. “If the private sector does not invest, the economic recovery will be slow.”
The economy is expected to perform better in the second half but the full-2016 growth is still expected at 3.1%, BoT assistant governor Jaturong Jantarangs said.
Growth last year was 2.8%.
Chambers of Moody’s Analytics said he does not think consumption will hold up in coming months due to uncertainty about Thailand’s constitutional referendum in August, which could make people delay large purchases.
Prime Minister Prayuth Chan-ocha, who heads the ruling junta that took power in May 2014, said on Monday that he would not resign if Thais reject a military-backed draft constitution.