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imageBANGKOK: Auto sales in Thailand in May grew at their fastest annual pace since May 2013, helped by government measures to boost spending and state investment in infrastructure projects, providing an encouraging sign for the sluggish economy.

Known as the "Detroit of Southeast Asia", Thailand is a regional production and export hub for the world's top carmakers. The auto sector accounts for around 10 percent of Thai GDP and employs a tenth of its workers in manufacturing.

Domestic car sales jumped 15.9 percent last month on-year after April's 1.7 percent rise, reflecting improved economic conditions, the Federation of Thai Industries said on Tuesday.

"We definitely started to see the light at the end of the tunnel," Surapong Paisitpattanapong, spokesman of the FTI's Auto Industry, told reporters.

"Higher domestic sales suggest the economy is getting better," he said, adding sales should continue rising this year.

In January-May, car sales still fell 2 percent on-year and the FTI said it would review its projections after June data.

For now, the FTI has forecast car sales at 750,000-780,000 cars for 2016. Sales fell 9.3 percent to 799,592 cars last year.

The army seized power in May 2014 to end months of political unrest but has struggled to revive Southeast Asia's second-largest economy, with exports and domestic demand still weak.

In a bid to lift the economy, the junta has introduced stimulus measures and ramped up investment in infrastructure, although big projects have been slow to get started.

Car sales have declined almost every month on a yearly basis since May 2013 following the fading effect of a government car subsidy scheme that ended in 2012, when sales surged 81 percent.

In May, exports of completely built units rose 11.9 percent from a year earlier. Although car export volume declined 2.3 percent in January-May on-year, the value rose by 14 percent due to exports of more expensive pickup passenger vehicles.

This year, the FTI expects 1.22-1.25 million cars to be shipped out, building on last year's record 1.2 million.

Surprisingly strong auto shipments should help support the trade-dependent economy, which the central bank expect to grow 3.1 percent this year with exports contracting 2 percent.

The economy expanded 2.8 percent last year.

Copyright Reuters, 2016

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