High Oil Prices Continue To Depress Thai Industry

[george]

High oil prices continue to depress Thai industry, economic performance

BANGKOK: -- Soaring oil prices which have pushed up production costs are expected to depress most industries and business in Thailand--except for four--during the second half of 2006, according to an executive of BankThai Public Co., Ltd (BT).

BankThai researcher Ong-art Tivahut said Sunday that his bank found that only four industries--including automobile production, auto spare parts manufacturing, and commercial hospital services would perform

well during the second half of 2006 due to continue high demand in overseas and support from free trade area (FTA) agreements Thailand signed with other countries.

Local auto production is anticipated to rise between 10-12 per cent but net profits for auto parts manufacturers would continue to decline during the rest of the year as compared with the second quarter due to the rising costs of raw materials and a decline in purchasing power.

Electrical power plants are experiencing robust growth this year as consumption is still growing between 5-6 per cent, derspite rising costs. Oil refineries will also gain because of high margins in regional and

world markets coupled with restraints between demand and supply.

The last industry expected to enjoy sustained growth during the remainder of 2006 is the private-hospital sector following continued demands for their services, especially from social security recipients and foreigners living in Thailand.

Up to 10 industries were identified as facing high risks during the balance of the year. They include the residential construction firms building single houses and town houses, due to the rising price of

raw materials and interest rates, Mr. Ong-Art said.

Major construction firms are also affected by government decisions to postpone its megaprojects, the frozen-chick-for export sector due to worries regarding bird flu, and the manufacturing and export of wooden furniture.

The BankThai researcher said a total of 46 industries would encounter "medium risks" during the period, including cosmetics, jewellery and fashion accessories, and electrical appliances.

--TNA 2006-08-27