Thailand braces for poor Q1 after weak export performance

[BANGKOK] Thai exports fell for a third month in March, suggesting Southeast Asia's second-largest economy will post a quarterly contraction in the first three months of the year as a key engine of growth fails to fire up.

The military took power in a coup in May last year to end months of street protests but has struggled to revive the economy which grew only 0.7 per cent last year. The worse-than-expected trade data comes as a fresh poll shows massive dissatisfaction with the junta's economic performance.

Thai shipments have long been weak even before the turmoil while domestic demand remains sluggish and large government infrastructure projects have yet to boost growth.

Sarun Sunansathaporn, economist with Tisco Securities, said his current forecast was for a quarterly contraction of 0.3 per cent, but it may be revised after the central bank's data later this week.

Exports, which equal more than 60 per cent of the economy, in March fell 4.45 per cent from a year earlier, the Commerce Ministry said, deeper than a 3.45 per cent decline forecast by economists in a Reuters poll.

Economists said recent weak data suggests the Bank of Thailand will leave the benchmark interest rate unchanged at 1.75 per cent on Wednesday after a surprise cut of 25 basis points at its last meeting on March 11.

The ministry blamed the poor export performance on slow global growth and a strong baht.

Annual exports to China fell 8.3 per cent in March, while those to Japan dropped 8.4 per cent and slipped 1.2 per cent to Europe. Shipments to the United States rose 5.6 per cent.

Imports in March fell 5.89 per cent after rising 1.47 per cent in February. Economists had expected a flat performance. Many imported materials are assembled into completed goods and shipped out again.

Exports shrank in both 2013 and 2014, dragging on the weak economic recovery. The central bank last month trimmed its 2015 export growth projection to 0.8 per cent from 1.0 per cent, but shipments are poised to contract for a third year.

The Commerce Ministry downgraded its export forecast to 1.2 per cent this year, compared with a 4 per cent rise earlier.

Falling global commodity prices have also hit the economy, eroding farmers' income and spending power. The Suan Dusit University poll last week showed about 92 per cent of respondents saw no improvement from the economic downturn.

The government is aiming for 4 per cent growth this year, but the central bank recently said its latest growth estimate cut to 3.8 per cent might even be missed.

REUTERS