Agricultural contraction results in March trade deficit

“March’s exports dropped by 6.8 per cent year on year, given a plunge in exports of agricultural products, and particularly a decrease in rubber export prices and deteriorated price competitiveness,” said Mathee Supapongse, senior director at the central bank.
Overall exports in March came in at $19.7 billion, while imports expanded 21.5 per cent to $21.1 billion.
The rise in imports was mainly attributed to a surge in crude-oil imports. Oil refineries increased their commercial reserves to cope with a possible energy crisis in the Middle East, and there was higher production before a temporary maintenance shutdown by a refinery in May.
“The Thai rice export figure shrank from September last year, due partly to a scarcity of production [during the floods]. Later, it [the export drop] might be down to Thai rice prices, which are higher than competitors’ in the world market,” Mathee said.
In February, Thai rice exports dropped 26.7 per cent in volume terms from the same period last year.
However, he expects overall exports will start rising again thanks to a recovery in production, while imports will likely continue to increase because of the purchase of capital goods for replacement purposes.
The economy continued to recover across all sectors in March, after last year’s flooding, while inflationary pressure heightened slightly on |concern over an increase in minimum wages, said the central-bank |executive.
“Manufacturing production results were better than expected. Earlier, the automobile sector was projected to make a full recovery in the second quarter of this year. However, based on the latest figures, it has [already] returned close to its normal level as some of the least-effected [by the floods] auto-makers have produced cars to make up for lost output,” he added.
Despite the overall Manufacturing Production Index contracting by 3.2 per cent year on year in March, the index for vehicles advanced by 14.7 per cent, compared with 10.7 per cent in February.
March’s capacity utilisation for vehicles rose to 112 per cent, from 97 per cent a month earlier.
Private consumption and investment witnessed continuous growth after supply-chain disruption that caused goods shortages, Mathee said.
The Private Consumption Index grew by 3.7 per cent from March last year, while the Private Investment Index rose by 9 per cent, given rising investment in commercial vehicles and a surge in imports of capital goods in several industries, notably electronics, electrical appliances, automobiles, and machinery and equipment.
Meanwhile, Thai businesspeople expect inflation to continue heading higher over the next 12 months, given pressure from the increase in minimum daily wages, according to the Bank of Thailand’s March survey.
“Inflationary pressure heightened in March’s survey after edging up by 0.1 to 0.2 percentage point for the previous three to four months,” Mathee said.
“Businesspeople expected this effect [wage hike] and many companies have already raised wages. The effect from the wage increase may be seen gradually, and we may have to wait for the full effect in April.”
In the March survey, headline inflation is expected to come in at 3.7 per cent over the next 12 months, up from the forecast of 3.5 per cent in the previous month.