Poor exports a major threat

However the government said it was unnecessary for economic stimulus, with the economy targeted to expand by 2 per cent this year.

Ekniti Nitithanprapas, deputy director general and spokesman for the Fiscal Policy Office (FPO), said July’s exports contracted 0.9 per cent and exports might not expand as targeted. “Although Thai exports to Europe, the United States, Japan and Indochina countries could expand well, exports to Asia, particularly China, have not been satisfactory. We concede that [the performance of] Thai exports is a risk to the Thai economy,” he said.

If the export value reaches US$20 billion (Bt638 billion) per month before the end of the year, it would have grown 1.5 per cent in 2014, Ekniti said. 

Despite consumption improving after the National Council for Peace and Order took control, it could not make up for the declining export growth, Ekniti said. Exports contribute 70 per cent to the country’s gross domestic product.

In July, local spending improved, reflecting a 3.6 per cent rise in value-added tax at constant prices. However, pressure remains with declines of durable goods consumption as a result of the first-car scheme’s expiration. 

In the month, private investment improved from a 5.5 per cent increase in imports of capital goods. Most of which were aircraft products. 

However, July’s commercial vehicles’ sales shrank 21.5 per cent year-on-year. July’s property tax contracted 11.1 per cent from the same period last year, while cement sales shrank 0.4 per cent.

State expenditure has accelerated with a 17 per cent rise in July. In the first nine months of this fiscal year, it expanded 2 per cent. This could be a  factor to drive the economy, Ekniti said.

“Now, there remains no necessity for stimulus as we still have money waiting for disbursement and this will stimulate the economy,” he said.

So far, about 75 per cent of this fiscal year’s budget has been disbursed, with the Ministry of Finance considering measures to accelerate budget disbursement.  “Next month, the FPO will include all budget disbursement plans in a growth forecast for the whole year,” he said.

Kulaya Tantitemit, executive director of FPO’s Macroeconomic Policy Bureau, said that agricultural production had improved, reflecting the 4.3 per cent rise in the agricultural production index in July following production increase in rubber and tapioca. Kulaya said July’s manufacturing confidence index rose for the third consecutive month to 89.7 as a result of the improved political situation and resulting boost to business.

The number of foreign tourists contracted 10.9 per cent year-on-year to 1.92 million, but 13 per cent from a month earlier. Most tourists came from the Middle East, Asean and Africa. 

Headline inflation was 2.2 per cent, while the unemployment rate remained low at 1 per cent. International reserves stayed at $169.4 billion, about 2.7 times short-term external debt.