Thai imports slump as economy struggles under military
Larger than expected decline overshadows export rise as military tries to boost growth
Thailand's exports improved last month 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 per cent year on year, stronger than economists' expectations of a 3.1 per cent gain. Imports surprisingly fell 14.03 per cent year on year, nearly matching the double-digit declines in April and March, and compared with economists' expectations of a 3.75 per cent 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 last month's export rebound can be sustained.
The mixed trade data released yesterday suggests the economy may not recover as quickly as expected from a contraction in the first quarter.
JP Morgan economist Benjamin Shatil said the steep fall in imports suggested the economy was continuing to struggle, and while he thought the Thai economy would do better in the second half of the year, "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 US$1.79 billion after two months in 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 per cent in the first quarter from the previous three months.
The Ministry of Commerce said exports of industrial goods were up 3.9 per cent last month, and exports of agricultural products rose 2.6 per cent, with rice exports up 35 per cent year on year.
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.