Worse-than-expected export data in June

The Commerce Ministry's data showed that Thailand's exports continued to nosedive in June. The export value dropped by 7.87 per cent from the same period last year to US$18.16 billion. It is the sixth straight month of contraction.

Imports also contracted by 0.21 per cent to $18.12 billion. 

In the first six months, aggregate export value dropped by 4.84 per cent on year to $106.86 billion while import value slid 7.91 per cent to $103.38 billion. Thailand locked in trade surplus of $3.47 billion in the period.

A Reuters poll expected June export to drop by only 5 per cent. 

Tisco Securities forecast the 4.6 per cent contraction. 

DBS Group eyed 3.7 per cent contraction in the month and forecast 2 per cent contraction for the whole year.

“That will mean 3 consecutive years of contraction in exports,” noted Gundy Cahyadi, DBS economist. “It is one reason why the authorities have shown little concern for the baht, despite the unit being the third worst performing Asian currency against the US dollars over the past month.  A weaker currency is preferred in a bid to boost export growth, even if the immediate impact is likely to be limited. Without stronger export growth, expect the manufacturing sector to remain sluggish, evidenced by how capacity utilization has fallen yet again in recent months.”

He added that as manufacturing makes up one third of the economy, as long as this sector remains weak, Thailand should expect sluggish GDP growth to persist. 

“If we were to see any chance of GDP growth inching higher going forward, a faster pace of fiscal disbursement will be crucial towards the year-end. We have lowered our 2015 GDP growth forecast to 3.2 per cent back in May but continue to see some downside risks to our projections,” he said.