Imports In January Grew The Slowest In 43 Months But Still Contributed To Deficit

[Jai Dee]

Imports in January grew the slowest in 43 months but still contributed to deficit

Imports in January expanded at the lowest level in 43 months, but a trade deficit was still yielded due to importation of oil and capital goods.

Commerce Ministry’s Permanent Secretary Karun Kittsathaphorn (การุณ กิตติสถาพร) announced the January figures of international trade, in which exports totaled 8.95 billion US dollars. The figure, which grew 13.6% from the same period last year, was attributed to the increase in exportation of items in the flood category. Items in the industrial category exhibited continued growth, especially automobile and parts, electrical circuits, and hard disk drives.

At the same time, imports amounted to 9.39 billion dollars, increasing 1.98% from the same month in 2005. The growth is considered the lowest in 43 months but still contributed to a trade deficit of 442 million US dollars.

Mr. Suwit Maysinsee (สุวิทย์ เมษินทรีย์), the Assistant to the Commerce Minister, has predicted that this year Thailand will experience around 6 to 7 billion dollars of trade deficit as investments are due to increase both in the private and state sectors. However the services sector will yield a surplus of 5 to 6 billion dollars due to recovery in tourism. The current account is expected to experience a 2-3 billion dollars deficit, which would still be lower than a "significant" level of 2.5% of the GDP.

Source: Thai National News Bureau Public Relations Department - 21 Febuary 2006

[cclub75]

In 2005, Thailand spent 20,82 billions USD for oil products (crude, refined, gas etc.)

(source : http://www.bot.or.th/bothomepage/databank/...ce/index03e.htm)

For the year, the total imports were : 117,88 billions USD.

It means crude represent oil 17% of imports value.

GDP Thailand = 180,9 billions USD (from quarter 4 2004 to quarter 3 of 2005)

Part of oil in GDP = 11,5 %

I've checked the numbers for France.

Total imports : 382 billions Euros

Total imports oil products (crude, refined products, gas etc.) : 37,5 billions Euros

GDP = 1648 billions Euros (2004)

Oils represent 10 % of the imports.

Part of oil in GDP =2,2 %

It would be interesting to crunch to number for other westerns countries, so we can compare.

Anyway, what I mean is : Thailand is 5 times more sensitive to the "oil risk" (increase of price) than France.

This is a huge liability for Thailand.

We have clearly a "tense" situation in the middle east (crisis with Iran, but not only). Therefore, there is a good probability that the oil prices could increase a lot this year (70 USD, to 100).

If this happens, Thailand will suffer a lot.

Here is my DOOM scenario :

-baril price reach 100 USD

-deficit of trade balance explodes

-people start to suffer because of gasoline prices (liter 50 THB), and start to complain (many people can not afford anymore to drive pick ups or cars)

-then a few month later a strong inflation occurs for other prices (because businesses trie very hard to regain their margin) (this process is always slow)

-people then suffer more. Social unrest.

-meanwhile the government tries very hard to delay the prices hikes for public transportation, electricity... By doing that, the public debt increases. It's of course useless.

-the government decides to use its 50 billions USD of reserve. Short term relief for the people.

-at that time, foreign investors pull out of the thai stock market - the SET crunches. The confidence of business and investors community vanishes

-at that time, the Thai Bath suffers heavy losses (because money pulls out of thailand)

-fuelling the imports bills and fuelling inflation, that become massive, and fuelling further depreciation of the THB. It's the hel_l circle.

-export business don't enjoy the devaluation of the THB, because they have to bear huge increase in cost (imports raw material for instance). Export collapse.

-people now suffer enormously, the crisis is much worse than 97. Political crisis, unrest etc.

-the whole economy collapses

You think it's science fiction ? Well yes for the moment. But... watch out the oil. That's the key.