Thailand Posts Biggest Trade Deficit In 11 Months

[Jai Dee]

Thailand Posts Biggest Trade Deficit in 11 Months

June 20 (Bloomberg) -- Thailand posted its biggest trade deficit in 11 months in May as imports rose to a record amid high oil prices, the commerce ministry said.

The Southeast Asian nation had a $646 million deficit in May following April's a $551 million shortfall, Karun Kittisathaporn, the commerce ministry's secretary general, told a press conference in Nonthaburi province in suburban Bangkok today. The deficit was the highest since June 2005.

Thailand is facing slower economic growth as rising oil prices spur inflation, damp consumption and increase imports. The $169 billion economy may expand as little as 4.2 percent this year from 4.5 percent in 2005 on lower consumer spending and corporate investments, the government's National Economic and Social Development Board said June 5.

"The trade deficit probably led to a current account deficit in May,'' said Usara Wilaipich, an economist at Standard Chartered Bank in Bangkok. Still, a deficit in the current account -- which measures income from trade, investment and services -- won't significantly hurt the baht and the economy "because the level of shortfall won't be as high as last year,'' she said.

The baht rose 0.34 percent to 38.33 against the dollar at 2:25 p.m. Bangkok time after falling as much as 0.09 percent in the morning. The benchmark SET Index fell 1.89 percent at 2:35 p.m., extending a 1.8 percent decline at the midday break.

Thailand in April posted its first current account deficit in 10 months because of costlier oil imports and slower gains in exports and tourism.

Current Account

The current account deficit was $3.71 billion last year, the country's first shortfall since 1997. A record $14 billion deficit in 1996 forced Thailand to abandon the baht's peg to the U.S. dollar a year later and allow the currency to float, triggering financial turmoil in the region.

Surging exports and higher tourism earnings will help narrow the current account deficit this year, Usara said.

Exports rose 19 percent to $10.8 billion, while imports rose 6.4 percent to a record $11.5 billion, Karun said.

Overseas sales of parts of computers and other electronics, which account for about a fifth of Thailand's exports, rose 27 percent to $2.21 billion, according to the commerce ministry data. That compares with a 17 percent rise to $1.95 billion in April.

Oil Imports

Imports of crude oil and other fuels in May rose 2.5 percent to $2.4 billion, according to the ministry. Thailand imports almost all of its crude whose prices are about 17 percent higher than a year ago.

"There will be more monthly trade deficits for the rest of this year because it is very hard to keep export growth at the same pace with imports,'' Suvit Maesincee, adviser to Commerce Minister Somkid Jatusripitak, told the same press conference. "Imports will remain at this high level'' because of oil prices.

Shipments of assembled vehicles and automobile parts rose 13.4 percent to $1.03 billion, the ministry said. That compares with April's 7.4 percent gain to $800 million.

In the first five months, Thailand had a trade deficit of $1.6 billion, according to the ministry's data.

The trade deficit for the whole year may range between $3 billion and $4 billion, Suvit said.

Thailand posted a trade deficit of about $7.3 billion last year, the commerce ministry said Jan. 23. That compares with a surplus of $2.3 billion in 2004 and was the first shortfall since 1997's $4.8 billion gap.

Source: Bloomberg - 21 June 2006

[sriracha john]

The 100+ Points Drop of the SET:

Edited June 21, 2006 by sriracha john

[penzman]

Following this bright announcement from Commerce Minister Somkid Jatusripitak

Thai exported over US$ 10 billion during the month of May

Deputy Prime Minister and Commerce Minister Somkid Jatusripitak(สมคิด จาตุศรีพิทักษ์) stated that during the month of May, Thailand has generated US$ 10 billion revenue from its exports. The ministry will also maintain the export rate at 17 percent.

Mr. Somkid disclosed that the exports during May when compared same period with last year has increased by 19 percent. He expected that the ministry will be able to maintain the export at 17 percent despite the economy facing the floatation of the Thai baht currency and high interest rates.

He has also assigned Department of Export Promotion and Department of Foreign Trade to look after the matter and to constantly maintain the export rates of the country.

Mr. Somkid spoke about his visit to France tomorrow (20th of June), adding that it would strengthen the trades between the countries and to discuss over the business and tourism as well. He will also visit Turkey and Switzerland.

Source: Thai National News Bureau Public Relations Department - 19 June 2006

[Scott]

Economic news is always confusing here in Thailand. I am never sure who is telling the truth. Trade deficit's for a country the size of Thailand don't sound good if they persist.