Thailand’s economy showed signs of cooling in February, with activity easing across both demand and supply measures after a robust January, according to a BofA report.
Exports and trade. Export growth decelerated to 10.6% year-over-year in February, down from January’s 23.6% pace. The slowdown was concentrated in petroleum - which fell 18.4% year-over-year - and in gems and jewelry. Electronics exports stood out as an exception, expanding 60.5% year-over-year.
Manufacturing. Industrial production weakened, with manufacturing output down 2.1% month-on-month on a seasonally adjusted basis and essentially flat year-over-year at 0.0%. The report attributes the decline to refinery maintenance in the petroleum sector, where output dropped 4.8% year-over-year, weaker automotive production at negative 1.3% year-over-year, and elevated inventories for electrical appliances, which were down 8.9% year-over-year. In contrast, integrated circuits and semiconductors rose 6.9% year-over-year, while hard disk drive production increased 19.7% year-over-year.
Private consumption. Household spending fell 1.8% month-on-month on a seasonally adjusted basis, driven chiefly by a pullback in durable goods after an earlier wave of electric vehicle purchases. Durable consumption moved into negative territory at 0.8% year-over-year, compared with 26.7% year-over-year previously. Semi-durable goods continued to expand, recording 2.0% year-over-year growth, supported by apparel purchases.
Tourism and services. Tourism receipts declined 2.1% month-on-month on a seasonally adjusted basis, reflecting fewer long-haul visitors, notably from the Middle East and Malaysia. Services activity contracted 0.7% month-on-month on a seasonally adjusted basis but still posted 1.7% growth year-over-year.
External balances. The current account surplus widened to $2.1 billion from $0.5 billion, a development that BofA links to a shift back to a trade surplus combined with a stronger services balance.
The BofA assessment portrays a Thai economy that moderated across several fronts in February, with mixed signals across sectors: pockets of strength in electronics and semiconductors contrasted with softness in petroleum-related output, autos, durable goods consumption and inbound tourism.
Key points
- Export growth slowed to 10.6% year-over-year from 23.6% in January, with petroleum and gems and jewelry weakening, while electronics rose 60.5% year-over-year - impacts: trade and export-oriented manufacturing.
- Manufacturing output fell 2.1% month-on-month (SA) and was flat year-over-year, hit by refinery maintenance, softer automotive production and high electrical appliance inventories - impacts: industrial production and related supply chains.
- Private consumption contracted 1.8% month-on-month (SA), led by a decline in durable goods, while semi-durables remained positive due to apparel spending; tourism and services also softened - impacts: domestic demand, retail, and tourism sectors.
Risks and uncertainties
- External demand risk - a further slowdown in exports would weigh on manufacturing and the trade balance.
- Sector-specific disruption - refinery maintenance and automotive softness highlight vulnerabilities in petroleum and auto manufacturing.
- Tourism flow volatility - weaker long-haul visitor arrivals could continue to pressure tourism receipts and services activity.