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Reuters: Thailand’s exports in June improved but imports tumbled sharply, highlighting the challenges faced by the military government as it tries to get economic growth back on track.
Exports grew 3.9% from a year earlier, stronger than expectations in a Reuters poll of economists for a 3.1% gain. But the growth rate was well below the 7.2% indicated by a senior Commerce Ministry official on Friday.
Imports surprisingly fell 14.03% from a year earlier, nearly matching the double-digit declines in April and March, and compared with expectations for a 3.75% decline.
Thailand’s imports are mainly parts or components which are assembled into completed products and exported again, so a sharp drop could cast doubt on whether the export rebound in June can be sustained.
The mixed trade data on Monday suggest the economy may not recover as quickly as expected from a contraction in the first quarter, despite the military government’s plans to kick-start growth.
Benjamin Shatil, economist with JP Morgan in Singapore, said the steep fall in imports suggests the economy continues to struggle.
“We are constructive on the Thai economy going into the second half of the year, but maintain our long-standing view that sluggish credit growth, a high household debt burden and limited fiscal stimulus so far this year will constrain the recovery.”
One bright spot was the trade balance which reverted to a surplus of $ 1.79 billion after two months in deficit. Economists had forecast a $ 0.6 billion deficit.
The data covered the first full month since the army seized power on May 22 in a bid to restore order following months of political turmoil and to revive the economy, which shrank 2.1% in the first quarter from the previous three months.
Signs of recovery
The prolonged crisis undermined consumer confidence, blocked the former government from making major investments and prompted many tourists to cancel visits, but did not have a major impact on exports.
Officials instead had attributed weakness in trade to lower commodity prices and sluggish global demand, which they now say is showing signs of recovering.
The Commerce Ministry said in a statement exports had shown signs of clear improvement in June, led by a 3.9% rise in industrial goods and a 2.6% gain in agricultural products, especially rice which jumped 35% on year.
Exports are equivalent to more than 60% of the Southeast Asian economy, so an improvement is pivotal for getting better growth.
Most economists now think the economy should post quarter-on-quarter growth in April-June, meaning the country will avoid a technical recession, which is commonly defined as two consecutive quarters of shrinkage.
Still, analysts say further catalysts are needed to get the broader economy firmly back on track.
The new military government is still working to fast-track long-dormant spending plans such as infrastructure projects, while tourism continues to feel the pinch from months of unrest.
In June, tourist arrivals dropped 24.4% from a year earlier, compared with a 10.7% fall in May, Department of Tourism data showed, and was down 10% in the first half.
Officials hope tourism will rebound later in the year, though economists say the impact of revived infrastructure spending may not begin to fully kick in until 2015.
In the first half of 2014, exports dipped 0.35% from a year earlier. In June, exports to the United States rose 11.2% from a year earlier, jumped 15.4% to Europe and rose 3.2% to China. Shipments to Japan were flat and those to Southeast Asian countries rose 2.3%.
