Thailand’s foreign trade facing severe troubles

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Thailand tradeThai exports dropped more than forecast in May 2015 and imports had their biggest tumble in nearly six years, emphasising how the country’s traditional growth engine of trade is not giving the struggling economy any help.

Exports, which equal more than 60 per cent of the economy, fell 5.01 per cent in May from a year earlier, the Commerce Ministry said on June 26, according to a Reuters report. The figures were worse than the 2.9 per cent drop seen in a Reuters poll among economist.

Imports collapsed 19.97 per cent, their biggest fall on an annual basis since August 2009. The poll projected a 9 per cent drop.

Many of Thailand’s imported materials are assembled into completed goods and shipped out again, so the bad May import number is another indication of how weak exports are.

Last month, exports to the US edged up 0.4 per cent from a year earlier, while those to China rose 3.3 per cent. Shipments to Japan were down 4.1 per cent and to Europe dropped 13.7 per cent.

“The collapse in imports would suggest business still lacks the confidence to import capital goods and raw materials to expand business,” said Kobsidthi Silpachai, head of capital markets business research at Kasikornbank.

In a bid to help the economy, Thailand’s monetary policy committee in both March and April cut the country’s benchmark interest rate by 25 basis points, taking it to 1.50 per cent.

Thailand exports1
Export treemap of Thailand (Click to enlarge)

The military in Thailand took power in May 2014 to end political unrest but has been unable to put Southeast Asia’s second-largest economy back on a solid growth track. Growth last year was just 0.9 per cent.

Last week, the Bank of Thailand (BOT) predicted exports would fall 1.5 per cent this year, rather than rise 0.8 per cent. The BOT also cut its economic growth forecast to 3.0 per cent, with a downside risk, from 3.8 per cent.

Low commodity prices have hurt exports and growth, cutting farmers’ purchasing power. Drought is also a threat. Finance Minister Sommai Phasee said on June 25 severe drought could cut economic growth by 0.5 percentage points this year. But he said it’s difficult to cut interest rates further as they were “extremely” low already. The central bank next reviews policy on August 5.

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Reading Time: 2 minutes

Thai exports dropped more than forecast in May 2015 and imports had their biggest tumble in nearly six years, emphasising how the country’s traditional growth engine of trade is not giving the struggling economy any help.

Reading Time: 2 minutes

Thailand tradeThai exports dropped more than forecast in May 2015 and imports had their biggest tumble in nearly six years, emphasising how the country’s traditional growth engine of trade is not giving the struggling economy any help.

Exports, which equal more than 60 per cent of the economy, fell 5.01 per cent in May from a year earlier, the Commerce Ministry said on June 26, according to a Reuters report. The figures were worse than the 2.9 per cent drop seen in a Reuters poll among economist.

Imports collapsed 19.97 per cent, their biggest fall on an annual basis since August 2009. The poll projected a 9 per cent drop.

Many of Thailand’s imported materials are assembled into completed goods and shipped out again, so the bad May import number is another indication of how weak exports are.

Last month, exports to the US edged up 0.4 per cent from a year earlier, while those to China rose 3.3 per cent. Shipments to Japan were down 4.1 per cent and to Europe dropped 13.7 per cent.

“The collapse in imports would suggest business still lacks the confidence to import capital goods and raw materials to expand business,” said Kobsidthi Silpachai, head of capital markets business research at Kasikornbank.

In a bid to help the economy, Thailand’s monetary policy committee in both March and April cut the country’s benchmark interest rate by 25 basis points, taking it to 1.50 per cent.

Thailand exports1
Export treemap of Thailand (Click to enlarge)

The military in Thailand took power in May 2014 to end political unrest but has been unable to put Southeast Asia’s second-largest economy back on a solid growth track. Growth last year was just 0.9 per cent.

Last week, the Bank of Thailand (BOT) predicted exports would fall 1.5 per cent this year, rather than rise 0.8 per cent. The BOT also cut its economic growth forecast to 3.0 per cent, with a downside risk, from 3.8 per cent.

Low commodity prices have hurt exports and growth, cutting farmers’ purchasing power. Drought is also a threat. Finance Minister Sommai Phasee said on June 25 severe drought could cut economic growth by 0.5 percentage points this year. But he said it’s difficult to cut interest rates further as they were “extremely” low already. The central bank next reviews policy on August 5.

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