Office of Industrial Economics lowers manu

Economy March 29, 2014 00:00

By The Nation

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The Office of Industrial Economics (OIE) has lowered its manufacturing growth forecast to 2-2.5 per cent from the previous estimate of 3-4 per cent as the prolonged political turmoil has affected new investment.

Meanwhile, the manufacturing production index (MPI) was also down from the earlier projection of 1.5 per cent and 2.5 per cent to be 1.5 per cent and 2 per cent, Somchai Harnhirun, director-general for the Office of Industrial Economics (OIE), said.

The forecast is based on there being a political solution by midyear, a Dubai crude-oil price of US$106.14 per barrel and the baht at 32.17 per US dollar.

The manufacturing growth and MPI are expected to grow this year, given 65 per cent of Thai goods produced for exports.

February’s manufacturing production index contracted for the 11th consecutive month by 4.4 per cent year on year to 166.48, while production utilisation was at 59.18 per cent due mainly to drops in production of cars, hard-disk drives, petroleum products, home electrical appliances, and frozen and canned seafood.

OIE director-general Somchai Harnhirun said the office was concerned about a contraction in imports of capital goods for the sixth consecutive month, reflecting declines in investment. Investment shrank 6.3 per cent in February, with a 13-per-cent contraction for machinery and parts.

Also in February, car production shrank 25.39 per cent year on year to 171,000 units because of last year’s high base from the government’s first-car tax incentives, and concerns among potential buyers over the political situation.

In the month, production by the electrical and electronics sector contracted 1.03 per cent because of a 4.68-per-cent drop in output of hard-disk drives. Offsetting that was higher production of monolithic integrated circuits due to expansion of smartphone purchases.

The textiles and garment industry’s production fell 2.55 per cent because of drops in purchase orders, particularly in the Asean market. However, fabrics production increased 4.17 per cent thanks to higher orders from Cambodia, while that of ready-to-wear clothes expanded 7.12 per cent after recoveries in the United States, Europe and Japan.

Food production rose 9.5 per cent after increased sugar output. Demand for iron and steel consumption declined 3.77 per cent to 1.56 million tonnes, while production dropped 10.89 per cent to 640,000 tonnes amid investment slowdowns in the property sector.

The delay of the government’s planned Bt2-trillion transport infrastructure project after the Constitutional Court shot down a borrowing bill is expected to lower demand for steel.