No light at end of tunnel for Thailand's economy
THAILAND'S economy may not pull out of recession easily, 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 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 last month, to be released tomorrow, is expected to show consumption and investment remaining subdued, and the current account in deficit again, after a US$3.8-billion (S$4.9-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 United States Federal Reserve to taper monetary stimulus.
ING forecast in a report a current-account deficit of US$5 billion this year, which would be the highest since 2005. Industrial output last month dropped 4.54 per cent from a year earlier, hit by weak electronics and autos.
Mr Eugene Leow, an economist with DBS Bank in Singapore, said: "Momentum in the domestic economy has waned and elevated household debt could drag on consumption."
However, Mr Sarun Sunansathaporn, an economist at Tisco Securities, said: "We think output data may not tell the whole story as the service sector is still good. Exports in Q3 are likely to be better, so we expect Q3 gross-domestic-product growth of 3.9 per cent on the quarter and 4.6 per cent on the year."