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By Kitiphong Thaichareon
BANGKOK, Jan 30 (Reuters) - Thailand's exports and industrial output tumbled in December for the second straight month, raising investor expectations that the central bank will slash interest rates again to revive a sagging economy.
Manufacturing output plunged 18.8 percent from a year earlier, more than double the rate analysts had forecast, while exports fell 15.7 percent, after a 17.7 percent decline in November, also more than expected, the Bank of Thailand data showed said on Friday.
Analysts polled by Reuters had expected an 8.5 percent drop in the manufacturing output after a 7.7 percent fall in November and a 15.2 percent slide in exports in the face of the global economic downturn.
The bearish December data raised market expectations that the central bank would continue to cut rates in the months ahead after a combined 175-basis-point rate cuts in December and January, which brought its benchmark rate to 2.0 percent.
"The manufacturing production index was much worse than expected and a big surprise on the downside, signs of a significant slowdown in economic activities," economist Usara Wilaipich of Standard Chartered Bank said.
"This points to a higher risk of negative growth in the fourth quarter of last year. That said, we see much more room for a rate cut by the Bank of Thailand," she said.
Central bank's estimates that the economy shrank by 0.5-2.0 percent in the fourth quarter from a year earlier and by 3 percent from the previous quarter, highlighted the urgency of further action to keep the economy from sliding into recession.
Analysts said near zero inflation gave Bank of Thailand ample room for more easing.
With oil prices falling, analysts expect retail prices to fall a median 0.2 percent in January from a year earlier, the first decline in the consumer price index since November 1999.
Other Asian countries that rely on exports are suffering, too. Last week, Singapore reported a record contraction in its economy in the final quarter of 2008 and forecast it would shrink as much as 5 percent this year.
The Bank of Thailand last week slashed its average 2009 inflation forecast to between a fall in prices of 1.5 percent to a rise of 0.5 percent, down from a previous forecast of a 3.0-4.0 percent rise expected in October and 5.5 percent in 2008.
It also cut its 2009 growth forecast to a range of zero to 2.0 percent, the slowest expansion since 1998 and well below what it had expected back in October when it forecast 3.8-5.0 percent for this year.
It forecast exports would fall by between 5.5 percent and 8.5 percent this year after 16.8 percent growth in 2008.
The Bank of Thailand last week cut its 2009 growth forecast (Writing by Vithoon Amorn; Editing by Darren Schuettler and Tomasz Janowski)