Thai September exports fall less than expected, but trade engine still weak

Thailand's trade-reliant economy continues to struggle to grow with its exports dropping for the ninth straight month.
Thailand's trade-reliant economy continues to struggle to grow with its exports dropping for the ninth straight month.PHOTO: BLOOMBERG

BANGKOK (REUTERS) - Thailand's exports in September fell less than expected, but had their ninth straight monthly drop while imports plummeted, showing that the trade-reliant economy continues to struggle to grow.

Long after a military coup in May 2014 ended months of political unrest, South-east Asia's second-largest economy has been unable to regain momentum, as pivotal exports and domestic consumption remain weak.

Exports in September fell 5.51 per cent from a year earlier, the Commerce Ministry said on Monday (Oct 26). A Reuters poll predicted a 7.65 per cent decline.

"For the third quarter, Thailand's exports look all right,"said Mr Santitarn Sathirathai, economist at Credit Suisse in Singapore. "We can't be too confident, however, because it's highly probable that it will be weaker in the next quarter."

In July-September, exports totalled US$54.71 billion (S$76.3 billion), about 5.2 per cent below the same period in 2014.

Mr Santitarn said he is worried "the effects of China's economic slowdown will really come to the fore" in the fourth quarter.

In September, exports to China fell 1.7 per cent while those to Japan dropped 6.9 per cent. Shipments to Europe slipped 9.5 per cent and those to the United States rose 1.1 per cent.

Imports plunged 26.2 per cent, the biggest fall since August 2009 and worse than the poll's forecasted 19.1 per cent drop.

The ministry said the big decline in imports stemmed from major declines in oil, gold and aircraft.

Ministry official Somkiat Triratpan said "we are not concerned about imports as they are usually up and down".

Many of Thai imports are assembled into completed goods and shipped out again. On the encouraging side, September imports of auto parts rose 19.5 per cent from a year earlier. Thailand is a major regional hub for global auto companies, and exports of cars and parts rose 20.6 per cent in September.

But in September, machinery imports fell 19 per cent and consumer goods 7.9 per cent, showing continued weakness.

Thai exports contracted in 2013 and 2014 and will do so this year despite a weak baht. The central bank last month forecast exports would decline 5 per cent, the biggest fall since 2009.

The Bank of Thailand's next policy meeting is Nov 4.

Mr Santitarn said there might be ways for the BOT to lower interest rates and weaken the baht to support growth.

"If there's no intervention, the baht will be too strong. There needs to be compromise, by either adjusting the currency or lowering interest rates, or both."