BANGKOK: Thailand’s exports contracted more than expected in January, showing the trade-dependent economy is still struggling in the face of sluggish global demand and China’s slowdown.
Although a coup in May 2014 ended months of street protests in Bangkok, the governing junta has been unable to overcome stubbornly weak exports and low domestic demand.
Thai exports, equal to more than 60 percent of economic output, tumbled 8.91 percent in January from a year earlier, the Commerce Ministry said on Thursday. A Reuters poll projected a drop of 7.1 percent. The decline was the 13th straight month and the biggest for any month since November 2011, when severe flooding closed thousands of factories.
“It’s clear that the global economy is worse than expected and this will have an impact on Thailand’s economic recovery,” said Charnon Boonnuch, senior economist at Tisco Securities.
Exports may shrink for the fourth year running in 2016 and the Bank of Thailand (BOT) will need to cut interest rates at its March 23 meeting, he added. But Tim Leelahaphan, an economist at Maybank Kim Eng, said domestic demand was improving so Thailand had no rush to act. “If we rush for a rate cut, we may waste our bullet. The two rate cuts last year were to help support exports but we haven’t seen them improving,” he said.
The BOT has left its benchmark rate unchanged at 1.50 percent since April 2014 following two surprise cuts. The rate reached a record low of 1.25 percent during the global financial crisis. In 2015, shipments fell 5.78 percent, the biggest annual pace of decline in six years.
Southeast Asia’s second-largest economy expanded by 2.8 percent last year, up from 0.8 percent in 2014, but its recovery remains fragile. In December, the central bank predicted 2016 economic growth of 3.5 percent, with flat exports. It will offer new projections on March 31. “It’s just one month of bad exports and we are sticking to our target of 5 percent (export growth) this year,” Deputy Commerce Minister Suvit Maesincee told a briefing.
In January, exports to China, Thailand’s second biggest market after the United States, dropped 6.1 percent from a year earlier, while those to Europe declined 2.4 percent. Shipments to the United States dropped 8.5 percent last month and exports to Japan tumbled 10.1 percent.
Imports slipped 12.37 percent in January on the year, led by a 41 percent fall in fuel and a 15 percent drop in raw materials. Many imported items are parts to be assembled into finished goods and shipped out.
