Commerce accepts 15% growth target may have to cut

The country faced its highest-ever trade deficit of US$10.34 billion (Bt327.6 billion) in the first six months of the year, due to a combination of shrinking exports and a significant increase in the import of construction materials and machinery for repairing and replacing manufacturing facilities following last year’s severe floods.
Deputy Commerce Minister Poom Sarapol said he had instructed the International Export Promotion Department to conduct a study into projected exports in the second half, as it could now be difficult to achieve the growth target of 15 per cent.
“The ministry will try to maintain the challenging goal of 15 per cent. However, with the unexpected serious impact from the euro-zone crunch, exports will [very likely] miss the growth target,” he acknowledged.
There was a continued contraction in exports during the first half, with the value in June falling 2.5 per cent from the same period last year to $20.12 billion as the euro crisis pressured regional and global demand.
The Commerce Ministry’s latest data showed that exports in the first half fell 1.66 per cent to $112.62 billion, while imports grew 10.28 per cent to $122.96 billion, leaving a record trade deficit of $10.34 billion for the period.
In June alone, imports rose 4.41 per cent year on year to $20.67 billion, resulting in a trade deficit of $550.1 million for the month.
Poom said he expected overseas shipments could return to positive growth territory this month if the economic impact of the European Union sovereign-debt crisis had not worsened.
Thailand is also unlikely to experience a serious trade deficit for the full year, as rising imports in the first half were due to high demand for machinery and raw materials to repair and replace machinery and buildings damaged in last year’s flooding, he added.
The ministry attributed the monthly export contraction to the intensifying debt crisis in the euro zone, which had dampened export-oriented manufacturing in several countries that order raw materials and components from Thailand. These countries include Japan, South Asia, South Korea, Taiwan and Russia.
Last month, Thai exports to 15 European nations dropped by 16.1 per cent year on year, while sales to the US increased by 5 per cent. Europe accounts for 10 per cent of Thailand’s exports.
The Kingdom first felt the pinch of the euro crisis in April, when exports contracted 3.7 per cent year on year, before recovering with 7.7-per-cent growth in May.
In June, exports declined 19.8 per cent in the agriculture sector, led by a 49.2-per-cent slump in rice exports and a 31.4-per-cent fall in rubber exports.
Demand for industrial goods rose by just 1.9 per cent last month. While exports of vehicles and parts showed a year-on-year increase of 21.3 per cent, paper and packaging products suffered from the steepest decline, at 73.2 per cent.