April power crunch hits production
Thailand's Manufacturing Production Index declined 3.8 per cent in April due to lesser production days, as well as a slowdown in export-oriented production, the Office of Industrial Economics (OIE) revealed yesterday.
OIE director-general Somchai Harnhirun said that the MPI dropped by 3.8 per cent year on year to 159.16 in April following the government’s request to manufacturers to reduce their production days from April 5-12 to deal with lower electricity reserves after Myanmar shut its natural gas fields for maintenance.
In April, some sectors saw slowdowns in producion – hard-disk drives, electronics parts, ready-to-wear clothes and processed seafoods. More than 60 per cent of production in these sectors is exported.
April’s capacity utilisation rose to 60.28 per cent, up from 59.40 per cent in the same period of last year.
In the first four months of this year, the MPI edged up 1.49 per cent to 175.29, while capacity utilisation advanced to 65.23 per cent from 62.20 per cent in the same period of the previous year.
Somchai said that the OIE maintained its estimate of this year’s manufacturing gross domestic product growth at 3.5-4.5 per cent. The MPI is targeted to rise 4-5 per cent in 2013.
The second quarter of this year could see risks in global demand for products due to the continuing economic problems in Europe and the unclear situation of the fourth round of US quantitative easing, which could affect purchasing power. The National Economic and Social Development Board has also forecast a slowdown in domestic consumption.
The OIE will finalise the second-quarter manufacturing situation and assessment in July.
Given the stable baht at around 29 to the US dollar, exports of manufacturing products may be less affected. If the policy rate is cut, that would likely have a small impact on the exchange rate as the rate cut signals to the market measures to deal with capital inflows, Somchai said. The baht movement depends on economic stability.
Automobiles
Somchai said that in April, automobile production increased 17.53 per cent due mainly to increase in the capacity of auto-makers since late 2012.
The hard-disk drive industry experienced a 17.12-per-cent decline in production after some purchasing orders were shifted to other countries like Singapore, and trading countries’ economies continued slowdowns. The ready-to-wear clothes sector saw a 13.96-per-cent drop, given slower orders from the European Union, the United States and Japan.
Somchai expected no impact from the May 21 blackout in the South on the country’s overall manufacturing, as most of the manufacturers are located in the central region and the East.
