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28 Jun 2012

Industry

Thai Electronics Industry, 2H12: Resumed Production amid Eurozone Debt Crisis (Current Issue No. 2287 Full Ed.)

A gradual recovery of Thai electronics industry is better than expected, although resumed production at many previously inundated factories is not yet at full capacity. According to the Ministry of Commerce, it was found that overall electronics exports in May 2012 reported a growth for the third consecutive month, with an export value of USD3.0888 billion, rising 11.0 percent YoY. Thus, the contraction in Thai electronics exports during 5M12 narrowed, with an export value of USD13.090 billion, contracting only (-)2.6 percent YoY.
However, electronics industry growth over the remainder of 2012 will undoubtedly depend on numerous factors, e.g., the Eurozone economic crisis that may plunge into a double-dip recession amid their prolonged debt problems that may threaten the economies of other countries, including Thailand. The EU is our major export market for electronics, accounting for 13.4 percent of our entire electronics exports in 2011. However, our electronics exports to this market slipped to12.9 percent during 5M12.
As some areas here are currently facing flooding, the government and our private sector should urgently implement water management solutions to prevent flooding that may severely affect industrial estates as seen last year. Although foreign investment was not affected by recent floods, possible flooding this year could deter their investment decision amid higher business costs due to the 40-percent increase in minimum wage that was put into effect in April.

With a fast-changing environment and increasing risk that may forestall electronics industry growth over the remainder of this year, KResearch, then, revises our forecast on their industry growth in 2012 down to an expected export value of USD31.170-32.750 billion, moving in a range of (-)1.5-percent contraction to 3.5-percent growth, against the contraction of (-)4.0 percent in 2011 due to the massive flooding.

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