The latest economic data for April 2011 clearly reflected the impact of shortages of some components needed in Thai industries relying on imports from Japan. As a result, overall industrial output decelerated steadily, especially automobile production that saw the steepest production declines. This was consistent with decelerations in exports, domestic consumption, investments as well as consumer and business confidence. Given this, it is expected that several economic sectors will inevitably face slowdowns in 2Q11.
- Industrial production in April exhibited a decline for fourth consecutive month, shrinking by 7.8 percent YoY, against a contraction of 6.7 percent in March. Automobile production, seriously inhibited by parts shortages, fell at its sharpest pace in 22 months by 27.8 percent. Because many industries, especially export-related production had to cut their outputs, capacity utilization (seasonally adjusted) plunged to a one-year low of 59.7 percent.
- Exports expanded at a slower pace of 24.7 percent YoY in April, down from the 31.0 percent growth recorded in March, led by exports of automobiles and auto-parts that contracted 9.3 percent (down from the 21.4 percent growth in March). Imports advanced 26.3 percent YoY in April, down slightly from the 27.2 percent growth recorded in March. Automobile and auto-part imports grew at their slowest pace of 10.4 percent in April due to the triple disaster in Japan. With the accompanying steep decline in the export value, Thailand logged a trade deficit of USD477.0 million in April, versus a surplus of USD1.892 billion in March.
- Private consumption grew 4.5 percent YoY, and investments expanded 12.8 percent YoY in April, down from 4.8 percent growth YoY and 14.1 percent YoY, respectively, in March, due largely to sluggishness seen in auto sales. The weakening signs seen in the foregoing economic indicators in April were consistent with eroding confidence within the consumer and business sectors. The Consumer Confidence Index in April fell for the third consecutive month to 79.6, while the Business Sentiment Index dropped to 47.3, crossing the no confidence threshold for the first time in 11 months.
Nevertheless, continued expansion was seen in the agricultural sector and number of international tourist arrivals to Thailand, because they were not affected by the disasters in Japan. As a result, agricultural output and prices surged in April, driving up farm income by 62.9 percent. According to the Bank of Thailand's report on economic and monetary conditions for April 2011, the disaster in Japan did not have a significant impact on tourism, reflected by this month's 9.7 percent growth MoM, seasonally-adjusted, in Japanese tourist arrivals to Thailand.
KResearch has assessed that the slowdown seen in key Thai industries during 2Q11 due to shortages of auto-parts from disaster-hit Japan may cause some THB65 billion in losses to Thai industry in 2Q11, representing 2.5 percent of the 2Q11 GDP. Nevertheless, as domestic spending will likely be bolstered by cash injections into the economy toward the end of 2Q11 (estimated at 0.9-1.4 percent of the 2Q11 GDP) amid political campaigning ahead of the July 3 general elections, KResearch expects that the GDP in 2Q11 will probably remain stable, or perhaps grow at the same rate as in 1Q11, projected at about 3.0 percent YoY.
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