On May 22, the Thai army seized power in a bid to restore order and
get on track a stumbling economy battered by weak demand and reduced
tourist arrivals. In January-March, the economy shrank 2.1 percent
from the previous three months.
Exports, which are equivalent to more than half of gross domestic
product (GDP), were down 2.14 percent in May from a year earlier,
the Commerce Ministry said. A Reuters poll had forecast a drop of 1
percent, similar to April's fall.
This year, Thai exports have been weak even though the political
crisis has not disrupted factories or ports, and the world economy
has been somewhat better.
The ministry said the main factor for May's export fall "was lower
global prices, especially rubber and sugar, which we can't control."
"Exports are expected to recover fast in the second half following a
global economic recovery and there are signs of a recovery in
exports of industrial goods," the ministry said.
In May, imports fell for a 10th straight month on an annual basis,
but dodged a fifth straight double-digit slump. They declined 9.32
percent, less than the poll's 14.0 percent drop.
Thailand is a regional hub and export base for global automakers and
a major producer of hard disk drives. Many of its imported materials
go into assembled goods and are shipped out again.
Imports of capital goods such as machinery, computers and parts
dropped 14.8 percent in May from a year earlier, compared with a
fall of 16.3 percent in April
For January-May, exports were 1.22 percent below a year earlier. In
May, shipments to the United States rose 2.8 percent and those to
Europe were up 11.9 percent from the previous year, but those to
China were down 5.7 percent
Pimonwan Mahujchariyawong, economist with Kasikorn Research Center,
said she's just cut her 2014 export growth forecast to 3 percent
from 5 percent.
"But we've raised our GDP growth forecast for this year to 2.3
percent from 1.8 percent because things have started to improve from
the first quarter, when everything was stalled," she said.
Pimonwan said that the junta's payment to about 92 billion baht
($2.8 billion) owed to rice farmers should boost consumption and
other factors like the lifting of curfews are "lifting sentiment".
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She expects quarter-on-quarter growth of 1.4 percent in April-June,
"so Thailand will not enter a technical recession".
The Bank of Thailand (BOT) last week forecast 0.5 percent
contraction in the first half, which ING said implies zero growth in
The BOT cut its full-year growth forecast to 1.5 percent from 2.7
On Friday, the BOT will give a revised forecast for export growth.
The Commerce Ministry has cut its projection to 3.5 percent from 5
Tourism, which accounts for 10 percent of the economy, is expected
to improve in the second half, industry executives say.
"June should be the last month that we will see a fall in tourist
numbers," said Piyaman Techapaiboon, president of the Tourism
Council of Thailand.
She predicted the number of tourist arrivals would fall 8.4 percent
in the second quarter from a year earlier but would increase 5.2
percent in the third quarter and 12.5 percent in the final three
In the first five months, the number of tourist arrivals dropped 6
percent from a year earlier. The council forecast tourist arrivals
of 26.8 million for this year, up slightly from 26.6 million last
(Editing by Richard Borsuk)
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