Recovery round the corner

Re-employment of some laid-off workers and better domestic spending have convinced the government and businessmen alike that an economic recovery may be around the corner.

Board of Trade of Thailand chairman Dusit Nontanakorn is particularly bullish, pointing out that most industries have shown signs of improvement since May, and predicting that although global economic uncertainties remain, exports should start picking up from now.

"Although exports have not yet turned to positive growth, the contraction rate has slowed down compared with early this year," Dusit said, adding that the growth should be sustainable, as many countries' economies have bottomed out.

Exports are still down slightly year-on-year in most sectors in the current third quarter, but will likely bounce back in the fourth quarter, he said.

This would result in an export contraction of between 15 and 20 per cent this year, after a contraction of 23.5 percent to US$68.2 billion (Bt2.3 trillion) in the first half of the year.

Backing him up is data from the Office of Industrial Economics. In the second half, 11 industries saw an improvement in orders, which led them to recruit workers back to plants. Meanwhile, capacity utilisation has increased to meet higher orders.

Of the 11 industries, four - electronics, chemicals, pharmaceuticals and food - were categorised as "fast-recovering". The remaining seven industries - textiles; automotive and auto-parts; cement; rubber goods; electrical appliances; plastics, and paper; are recovering at a slower pace.

Finance Minister Korn Chatikavanij voiced optimism last week, saying that based on the economic indicators for June and the second quarter, the Thai economy would achieve a "V-shaped" recovery around the year-end.

The National Statistics Office released data last week show-ing that unemployment dropped slightly in June to 550,000, or 1.4 percent, of the 38.36 million-strong workforce, supporting the government's bullish statements that the economic downturn has bottomed out.

The figure was down by 110,000 from May's level, but 110,000 higher than the level registered in June last year.

Though uncertainties remain, the global recession is expected to end soon. Last week, it was reported that US employers throttled back on layoffs in July, cutting just 247,000 jobs - the fewest in a year - and that the unemployment rate had dipped to 9.4 per cent.

In another positive sign, Japanese automaker Honda projected an increase in its

global vehicle production by 90,000 units to 840,000 due to strong demand in Asia, particularly in Thailand, China, India, Indonesia and Brazil.