BackThailand reports poor August trade data
Exports, which are equal to more than 60% of the economy, dropped 7.4% from a year
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Bangkok: Thai exports unexpectedly fell the most in August since flooding in late 2011 paralysed the economy, putting pressure on the military government to speed up stimulus measures.
Exports—which are equal to more than 60% of the economy—dropped 7.4% from a year earlier, the commerce ministry said on Monday, compared with the forecast of a 3.6% decline in a Reuters poll. In July, shipments slipped 0.85% from a year earlier.
Imports fell for a 14th straight month in August, and by five times as much as the poll expected. They plunged 14.17% from August 2013, compared with the forecasted 2.85%.
Many imported materials are assembled into completed products and shipped out again. So a slump in imports bodes ill for future shipments.
Monday’s trade data was the latest confirmation that Thailand’s pivotal engine of exports isn’t not firing at all. And another one, consumption, also remains weak, which leaves some economists wondering what will generate growth.
Bernard Aw, economist with Forecast Pte in Singapore, said the decline in imports “has been across the board" and led by reduction in purchases of capital goods and raw materials.
The slowdown in domestic consumption was behind the weak purchases, he said, as the country suffered months of political unrest that led to a military coup in May.
Economists say that with economic pillars still wobbly, the military government needs to take more action to revive Southeast Asia’s second-largest economy, which contracted in the first half.
“The most important thing right now is for the government to be clear on their projects; what will be done, what timeline to follow," said Gundy Cahyadi, an economist with DBS Bank in Singapore. “Still, the recovery in consumption will take time."
New measures coming?
Cabinet ministers have said the government is planning further measures, some of which are expected to come out this week.
Kritsada Jinavijarana, the head of the finance ministry’s fiscal policy office, said on Monday the measures will include a speeding up government disbursements to boost growth, though he added “that’s not to inject new money but to make the most of the existing ones."
He said there was more than 100 billion baht ($3 billion) left from previous years that could be spent.
Kritsada also said he expects the economy to grow at least 1.6% this year but saw exports expanding less than 1%, rather than a previous forecast of 1.5%.
On Friday, the Bank of Thailand slashed its 2014 export growth forecast to zero from 3%. Despite no export rise, the central bank maintained its forecast that the economy will grow 1.5% this year, as long as the government boosts spending.
On Monday, the commerce ministry said it now hopes 2014 export growth of 0.5-1.0%, instead of its earlier 3.5%. In the first eight months of 2014, exports have fallen 1.36% from a year earlier.
The ministry said key factors for the August export drop were weaker gold and oil exports due to a high base effect, and lower commodity prices, especially for rubber.
“It looks like the recovery is a lot slower than we expected," said Kampon Adireksombat, a senior economist with Tisco Securities.
Exports to the United States slipped 0.3% in August from a year earlier (from +4.5% in July), while those to Europe were down 5.4% (+7.3% in July) and Japan off 7.6% (+3.3%).
Shipments to China plunged 14.4% in August, compared with a fall of 1.7% a month earlier and ones to Southeast Asian countries were flat (-5.2% in July).
Thailand avoided a technical recession by having slight on-quarter growth in April-June after a contraction of 1.9% in the first three months of 2014. Reuters
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