* March factory output -10.41 pct y/y vs -8.2 pct in Reuters
* Output falls for 12th straight month vs year before
* Prolonged political turmoil hurts consumption, investment
* March customs exports -3.1 pct y/y vs -1.0 pct in Reuters
* March imports -14.2 pct y/y; trade surplus $1.46 bln
(Adds comments from the commerce ministry)
By Orathai Sriring and Kitiphong Thaichareon
BANGKOK, April 28 Thai factory output fell in
March for the 12th straight month and exports were weak as
ongoing political turmoil spurred a deeper manufacturing
downturn than in the 2008/09 global financial crisis and
threatened to take the country into recession.
Southeast Asia's second-largest economy has endured six
months of political turmoil as protesters seek to topple Prime
Minister Yingluck Shinawatra and the central bank has warned it
will cut its 2014 growth forecast again, with GDP probably
shrinking in the first quarter.
Industrial output in March fell 10.41 percent from a year
earlier, the Industry Ministry said on Monday. That compares
with the 8.2 percent decline forecast in a Reuters poll and a
revised 4.7 percent drop in February.
Exports, the bulk of which are industrial goods, fell 3.12
percent in March from a year earlier, the Commerce Ministry
said, worse than the estimate of a 1 percent dip in a Reuters
poll. Shipments had edged up 2.4 percent in February.
Imports slumped 14.19 percent, boding ill for exports as
many imported materials go into assembled goods and are shipped
out again. Helped by the weakness of imports, there was a trade
surplus of $1.46 billion on the month.
But while there are headwinds, the government is optimistic
about a turnaround in exports in the second quarter.
"We think exports will improve from the second quarter on
the back of the global recovery," Srirat Rastapana, the commerce
ministry's permanent secretary, told a news conference.
Manufacturing accounts for a third of GDP and exports are
equivalent to about two-thirds of the economy each year.
Markets were unfazed by the data, with the baht up
slightly on fund inflows as Bangkok shares advanced.
Pimonwan Mahujchariyawong, an economist with Kasikorn
Research Center, expected the economy to contract 1.8 percent in
the first quarter from the previous three months.
"We may see positive growth in the second quarter, but we
have to see whether exports are able to grow as expected. If
not, it's likely we will have a technical recession," she said,
meaning two consecutive quarterly drops in GDP.
She forecast 1.8 percent growth for 2014. The central bank's
most recent forecast is 2.7 percent but it has cut it several
times since the crisis flared up last November.
Prolonged unrest has hit domestic demand, delayed public
spending and scared away tourists from the capital.
"Needless to say, the key reason for potential growth
downgrades is blamed on the unexpected delays in government
expenditure, which accounted for a significant 10 percent of GDP
in real terms in the last three years," OCBC Bank economist
Barnabas Gan in Singapore wrote.
He forecasts growth of 1.5 percent for 2014, down from his
initial 2.8 percent.
Consumer confidence is at a more than 12-year low, weaker
even than during the bad floods of late 2011, violent political
unrest in 2010 and a deadly tsunami in late 2004. The Federation
of Thai Industries (FTI) said on Monday its index of industrial
confidence hit a 57-month low in March.
Overall capacity utilisation in industry in March was 64.3
percent, up from 58.9 percent in February. The Industry Ministry
said the car sector, hard disk drives, petroleum, electrical
appliances and canned frozen seafood were weak.
RISK OF RECESSION
Tisco Securities economist Sarun Sunansathaporn forecast the
economy would contract 0.4 percent in the first quarter from a
year earlier and about 2 percent from October-December.
"That's because of the political impact on everything -
consumption, investment, tourism, government spending," he said.
But he expected growth in the second quarter as tourism and
exports should improve along with investment, with a newly
installed Board of Investment set to approve investment pledges
of about 660 billion baht ($20.4 billion) after a delay.
Sarun expects 2014 economic growth of 2.5 percent, in line
with the IMF's prediction. That would be the lowest in Asia.
Despite the risks to growth, the Bank of Thailand kept its
policy interest rate at 2.0 percent last week.
. Most economists do not expect further cuts for
now, saying lower rates would do little to help the economy at a
time of unrest, poor confidence and high household debt.
It's not all doom and gloom. Siam City Cement,
Thailand's number two cement maker, said first-quarter net
profit rose 56 percent from a year earlier, helped by exports,
to neighbouring countries for big infrastructure projects.
Tourism outside Bangkok is holding up but arrivals still
fell 5.85 percent in January-March from a year before. The
Tourism Council of Thailand estimates cancellations will cut
earnings in the tourism industry, which accounts for about 10
percent of GDP, by 83 billion baht in the first half of 2014.
Airlines and hotels are suffering. "The industry has been
affected by lower passengers because many foreign tourists avoid
Bangkok," Thai AirAsia CEO Tassapon Bijleveld said.
Five-star hotelier Erawan Group said its revenue
probably fell 25 percent in the first quarter. It hopes for a
better second half but sees revenue growing just 2-4 percent
($1 = 32.31 Thai Baht)
(Additional reporting by Khettiya Jittapong, Satawasin
Sataporncharnchai, Manunphattr Dhanananphorn and Pairat
Temphairojana; Editing by Alan Raybould and Jacqueline Wong)