Thai economy slowing sharply as exports sink

Thai economy slowing sharply as exports sink

BANGKOK (Reuters): Thailand's economy is hurting badly, with manufacturing output and exports sinking as many of its major markets near recession, key data showed on Friday.

Figures from the Thai central bank confirmed analysts' fears that industrial production dropped in July from June, its second successive month-on-month decline on a seasonally adjusted basis.

Thai exports fell 14.2 percent year-on-year in July, while imports contracted 3.8 percent against the year-ago period, the Bank of Thailand said.

BOT chief economist Atchana Waiquamdee blamed the figures on the slowdown in Thailand's main markets, which have seen significant contractions in demand, especially for high- technology goods.

"The concern is on the sharply falling exports which are attributable to slowing world economies including those of major trading partners," Atchana told a news conference.

"This is especially so when compared with booming exports in July last year."

Atchana said the bank believed Thai exports would probably contract by 4-5 percent overall this year.

The BOT data was bad on almost all fronts.

Although the widely watched Manufacturing Production Index (MPI) rose 1.9 percent year-on-year in July to 112.0, this was down from a revised 112.1 in June and 113.9 in May, the BOT figures showed.

Thai exports fell a sharp 14.2 percent, year-on-year, to US$5.143 billion in July from $5.388 billion in June and $5.996 billion in July 2000.

Thai imports were worth $5.146 billion in July, up from $4.985 billion in June but down 3.8 percent year-on-year from $5.351 billion a year ago.

The plunge in exports sent Thailand's trade balance just into deficit. The country posted a $3-million trade deficit in July compared with a $403-million surplus in June and a $645 million surplus last July.

The figures were generally in line with market expectations and showed Thailand's key industries are suffering from the worldwide slowdown in demand for electronics and electrical appliances.

Output of construction materials, another key plank of the Thai economy, also declined, due in part to a temporary closure of a large local cement factory, the BOT said.

Kenneth Ng, head of research for ING Barings Securities in Bangkok, said Thailand's financial markets had been expecting disappointing figures.

"I think that people were pretty much expecting a poorer third quarter coming through," Ng said.

He said the trade figures were in line with data released earlier in August by the Thai commerce ministry.

"I wouldn't think that these figures were particularly unexpected in terms of a slowdown in exports in July."

The Thai stock market remained unruffled by the figures, confirming that weak data was widely expected.

By 0912 GMT (4.12 p.m. Jakarta time), the benchmark Stock Exchange of Thailand composite index was up 0.33 percent to 332.72 points.