Thai Trade Surplus At New High In November

[Jai Dee]

Thai trade surplus at new high in Nov.

Customs Department trade figures showed Thailand's trade surplus in November has risen to a new record high of US$1.74 billion from US$810.4 million in October, the Ministry of Commerce said Thursday.

The November trade figures also raised January-November trade surplus to US$2.19 billion, Rachane Potjanasuntorn, director-general of the Department of Export Promotion said.

November exports rose 20.7 % from the same period last year to US$11.87 billion, compared with 20.1% growth in October.

Imports rose by 3.5% to US$10.13 billion, versus 9.5% in October.

Source: The Nation - 21 December 2006

[Jai Dee]

Thai export last month reached hightest mark of trade balance in six years

Department of Foreign Trade director-generalRachen Pojanasunthorn revealed that the figure of Thai export in November mounted to 11,871 million US dollars, exceeding 10,000 US dollars for seven consecutive months. Prices of products in agricultural, industrial and other sectors have risen up.

The export figure last month expanded 27.8 percent in new markets such as India, Eastern Europe, Africa and China while the figure in major markets such as the USA, Europe, Japan and Asean grown by 15.5 percent.

The rise stemmed from the Free Trade Agreement (FTA), as it helped Thailand to have higher export rate by at least 20 percent.

Mr. Rachen also said the import figure in November 2006 was 10,129.8 million US dollar which meant the trade balance of Thailand was 1,742.2 million US dollars, the highest mark in last six years.

In addition, Mr. Rachen gave his view of the appreciation of Thai baht, urging the government to impose other measures for the issue and with no effects on export.

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

[oxymoron]

Well is that not interesting.

A few exporters whinge about the exchange rate, the administration makes a decision that wipes over around 15% plus off the SET in a day, and causes shock waves through the regions financial markets while the country is in trade surplus.

Talk about "loose face" in my world you would loose your job plus.

[xbusman]

Well, you have to look at the real numbers before making any conclusions.

The Thai baht has appreciated about 20% year on year, so if your income in US dollars grows by 20% that means that actual goods and services have not increased at all and my have in fact decreased.

Also, if your currency is stronger by 20% and dollar amount of import increases by 3%, that means that actual goods coming in increased by 23%. That 23% increase removes goods and services provided by Thai firms.

While it looks good on the surface, when adjusted for currency fluctuation it is a four alarm fire. Business here is experiencing no growth while competitors are flooding the market with foriegn goods. It is arguably okay if you have other other growth in say high tech engineering or innovative products with a mobile educated workforce that can adapt easily, but when you are an agricultural and low end manufacturing center, it spells certain disaster.

This whole capital hold back program was a desperate attempt to stave off impending disaster. The numbers underpinning the economy are all in the red zone. NPLs, empty real estate, rapidly shrinking exports, explosively growing imports, hot money pouring into capital markets at a stunning rate, China sucking the business out from underneath them, tax revenues dramatically shrinking with huge off book liabilities in the health care and rice support to name just a few. You can bet they are scrambling behind the scenes and looking at even more desperate measures in the near future.

[ThaiGoon]

Strong growth ahead for construction, auto and electronics

"Santi said that after weighing up the expected positive and negative impacts on industry next year, the FTI forecasts that Thai industries will grow 7 per cent next year overall, the same rate as this year."

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As a Thai, it's been pretty interesting for me to see how some "farang" expats on here can always find anything ( in/about Thailand) to be negative or spin it so that it would look negative. It makes me wonder why they are still here.

[bkkandrew]

Strong growth ahead for construction, auto and electronics

"Santi said that after weighing up the expected positive and negative impacts on industry next year, the FTI forecasts that Thai industries will grow 7 per cent next year overall, the same rate as this year."

-----------------------------------------

As a Thai, it's been pretty interesting for me to see how some "farang" expats on here can always find anything ( in/about Thailand) to be negative or spin it so that it would look negative. It makes me wonder why they are still here.

Hmmm...

Your command of english is good. Are you aware that "goon" is defined by Cambridge dictionary as:

goon (SILLY PERSON) Show phonetics

noun [C] OLD-FASHIONED INFORMAL

a silly or stupid person

goon (CRIMINAL) Show phonetics

noun [C] US INFORMAL

a violent criminal who is paid to hurt or threaten people

I wonder which one you purport to be...

On the matter at hand, it is surprising that the Thai authorities express monetary values in US Dollars, rather that Thai Baht, given that, er, THB is the local currency. With the currency differential, expression in THB would show a marked worsening of the trade balance, but I suppose this would lose face...

Who knows what they will say next year, perhaps the world's weakest currenct will be the Israeli Shekel and they will disguise their shortcomings by publishing reports quoting values in that currency

[ThaiGoon]

Hmmm...

Your command of english is good. Are you aware that "goon" is defined by Cambridge dictionary as:

goon (SILLY PERSON) Show phonetics

noun [C] OLD-FASHIONED INFORMAL

a silly or stupid person

goon (CRIMINAL) Show phonetics

noun [C] US INFORMAL

a violent criminal who is paid to hurt or threaten people

I wonder which one you purport to be...

On the matter at hand, it is surprising that the Thai authorities express monetary values in US Dollars, rather that Thai Baht, given that, er, THB is the local currency. With the currency differential, expression in THB would show a marked worsening of the trade balance, but I suppose this would lose face...

Who knows what they will say next year, perhaps the world's weakest currenct will be the Israeli Shekel and they will disguise their shortcomings by publishing reports quoting values in that currency

Wow, a very interesting perspective from another farang. I'm definitely not a math wizard (I'm an unkilled Thai college grad afterall), but isn't a positive number divided by any positive number still a positive number? (i.e., a trade surplus, whatever currency it's in, is still a trade surplus.) Also, in the reports, they did compare the number with the number from the previous month in the same currency. Perhaps, due to me being a "silly" Thai, I can't see what Bkkandrew is seeing?

[kmart]

Please don't allow yourself to remain "unkilled".

[ThaiGoon]

Please don't allow yourself to remain "unkilled".

Oopsy doopsy!

[Heng]

Yeah, the volume is there, which is great... but the margins are slightly thinner. Some sectors worse than others.

[xbusman]

I dont read that as the volumes are there. I read that as the volumes have done a huge turnaround, that export volume is shrinking dramatically while import volume has grown explosively. The strong currency make the numbers look good but the volumes represent things like employment, tax revenues, and GDP growth.

On a micro scale, lets say I make a widget using one thai worker and export it for 100 baht and get 42 baht for $, I have grossed $2.38. Next year I make one widget for 105 baht (inflation due to my costs being up 5%) and get 35 baht for a $, I grossed $2.76. In dollar terms, exports increased 16% without expanding GDP one baht. No new workers were hired, no new products created, no new business captured.

Really, tracking the exports and imports in US dollars is irrelevant. The US is not the only trading partner, granted that when combined with China with the remimbe fixed to the dollar, your looking a big share, the export/import balance should only be looked at in Thai baht. If you did that, I think you would find that the export market has possibly stopped or maybe even shrunk while the import market is going off the charts.

THE REAL PROBLEM HERE, is not the baht or even the dollar for that matter. THE REAL PROBLEM is the remimbe. The chinese should never ever be underestimated in business. By pegging the remimbe to the dollar, they are locking up the customer and "potentially" excluding all other players. With huge quantities of hot speculative money sloshing around the world that is not interested in the low returns of the west, the instability in the mideast, narrows it down to... asia. In asia, you cant speculate in china because of regs and the pegs. That leaves the little asian countries such as Thailand open to that mass of money which they can do little to protect themselves from.

China is perfectly happy to take all our manufacturing and has been doing so for the past few years. The recent move by the central bank was not planned or done lightly. I think you will find some pretty competant people are reacting in a very serious way to some serious numbers they are beginning to find. They are desperate to protect Thailand from this disaster unfolding that is not of their making. The problem is being created in Beijing and Washington, its just that the weak cousins get to be the victims.

I would like to see the graph of Thai exports measured in Thai baht against Thai imports measured in Thai baht and adjusted for inflation. The people in charge are sending extreme messages with signals such as the 30% hold back and dont assume they are doing it lightly or without understanding the consequences of either their actions or failure to act.

[Heng]

I dont read that as the volumes are there. I read that as the volumes have done a huge turnaround, that export volume is shrinking dramatically while import volume has grown explosively. The strong currency make the numbers look good but the volumes represent things like employment, tax revenues, and GDP growth.

snip

Really, tracking the exports and imports in US dollars is irrelevant. The US is not the only trading partner, granted that when combined with China with the remimbe fixed to the dollar, your looking a big share, the export/import balance should only be looked at in Thai baht. If you did that, I think you would find that the export market has possibly stopped or maybe even shrunk while the import market is going off the charts.

Wasn't reading anything. Was referring to my own buisnesses and those of family, friends, and acquaintences. Exports slightly up in volume. Imports steady. Profits slightly down as our export volume is higher at lower margins with our import margins steady at higher margins.

edit: and tracking in US$ (in additional to Thai Baht) because that's what most if not all of our customers or suppliers make payment with or expect payment in, wherever they are from.

Edited December 22, 2006 by Heng

[xbusman]

OH, sorry Heng, I thought you were referring to the article and the overall picture. Regards you and your circle of acquaintences it sounds like your well balanced to weather the problems of a strong baht. To counter the problems in my business I have had to start importing as well and that is indeed going very well. The problem I see is that even with your business reporting export volumes "slightly" up, that means that GDP is not growing. Is your growth in exports higher than the rate of inflation? If not, while you could be profitable from the higher margins generated from your imports, the GDP could be actually shrinking in real baht terms. Negative GDP growth is a one way ticket to a train crash down the road.

I think reporting or thinking of macroeconomic issues requires consistancy because the trend is more important than the data. The US dollar is mostly irrelevant for the majority of transactions in Thailand and converting overall statistics to any other currency is patently absurd as it skews the information in non uniform ways and distorts trends with currency fluctuations. How silly is that?

[ThaiGoon]

Mr. xbusman, yould you care to elaborate on this part in the original article, "Thailand's trade surplus in November has risen to a new record high of US$1.74 billion from US$810.4 million in October"? According to my rough and perhaps naive estimation, that's way more than 16% increase of values that the appreciation of Baht against US dollar could have accounted for. That's roughly more than 100% increase according to my naive Thai math. Besides, had the 16% appreciation not happened (or spanned) way beyond Nov-Oct in which these trade surplus numbers were calculated?

[Jai Dee]

Thai exports surge 20.7 per cent in November

BANGKOK, Dec 22 (TNA) - Thailand's exports in November surged 20.7 per cent to over US$11 billion in value with a trade surplus of $1.74 billion, the highest in six years, according to the Commerce Ministry.

Rachane Potjanasuntorn, Director-General of the Export Promotion Department, revealed the country enjoyed total exports of $11.87 billion in November, up 20.7 per cent from the same month last year, and $118.99 billion in the first 11 months of this year, up 17.2 per cent.

Imports in November totalled $10.13 billion, up 3.5 per cent, and $116.8 billion in the first 11 months, a rise of 7.5 per cent.

It resulted in the country enjoying the trade surplus of $1.74 billion in November and $2.19 billion in the first 11 months compared with a trade deficit of $7.09 billion in the corresponding period the year before.

Given the 11-month export figure, Mr. Rachane said he was confident exports for the whole year would average over $130 billion, up 17.5 per cent, as targeted by the ministry.

He said the exports surpassed $10 billion for the seventh consecutive month mainly because the government had attempted to penetrate new export markets and cooperate with the private sector to maintain existing markets.

It is believed the country would enjoy the trade surplus of at least $3 billion for this year.

Mr. Rachane said although the stronger baht remained a pressing factor to exporters, Thailand still retained export competitiveness.

He said that exporters' concerns over the continued rise of the baht should ease since the government had already taken measures to curb the currency volatility, which is seen as a risk factor to exports.

Next year, he said, the ministry would cooperate with the private sector in pushing for continuing export growth of at least 10-12.5 per cent to $140 billion.

Source: TNA - 22 December 2006

[Heng]

OH, sorry Heng, I thought you were referring to the article and the overall picture. Regards you and your circle of acquaintences it sounds like your well balanced to weather the problems of a strong baht. To counter the problems in my business I have had to start importing as well and that is indeed going very well. The problem I see is that even with your business reporting export volumes "slightly" up, that means that GDP is not growing. Is your growth in exports higher than the rate of inflation?

Is our export growth this month (quarter, year, etc.) higher than the rate of inflation? I'd assume so but we've never taken inflation into account (nor GDP for that matter), nor am I aware what the exact rates are... other than most folks seem to say it's around 5% per year. So if the question is whether our growth (and certainly our ROI) over the past month has been more than less than half a percent, then yes.

[xbusman]

Mr. xbusman, yould you care to elaborate on this part in the original article, "Thailand's trade surplus in November has risen to a new record high of US$1.74 billion from US$810.4 million in October"? According to my rough and perhaps naive estimation, that's way more than 16% increase of values that the appreciation of Baht against US dollar could have accounted for. That's roughly more than 100% increase according to my naive Thai math. Besides, had the 16% appreciation not happened (or spanned) way beyond Nov-Oct in which these trade surplus numbers were calculated?

I dont think it makes any sense to look at export and import figures for one month. There are way too many weird factors that can grossly skew monthly numbers. Just one purchase from Thai Air to airbus can turn the numbers upside down for a single month. Obviously something significant impacted November.

It resulted in the country enjoying the trade surplus of $1.74 billion in November and $2.19 billion in the first 11 months compared with a trade deficit of $7.09 billion in the corresponding period the year before.

The first eleven months ran a surplus of 2.19 billion and November alone was 1.74billion. Industry and GDP work a lot slower than that, but we can safely say that the trend is for a trading surplus. However, if the surplus for October was 810M and November was 1.74B that means that the two month surplus was 2.5B and the ten months previous was a trade deficit of 400M aggregate. So we lost 7B last year, .4B in the first four months, and then in late September, miracle of all miracles, it turned around to the tune of billions of dollars. What does this mean, I would guess (OPINION HERE!!!) that something dramatically changed in September to affect October/November figures. Perhaps say..... a government?

Your math is not naive, in fact its quite good, its your perspective your having trouble with. Even in reviewing these articles we are doing so with very limited and questionable numbers and can only see a very small part of the picture. To make any sense from the soft science of economics, you need good data collection and historical perspective, neither of which is readily available here so your confusion is very justified.

The other thing to keep in mind is that exports and imports are generally long term things. It takes years to develop sales, months to produce, months to get paid. The export window from sale to cash in the bank can take up to a year, sometimes more. What we are seeing now in the market is the result of the business climate in January when the exchange rate was much differant. Why the rice traders and garment people are screaming now is that contracts that are cashing out are doing so at a loss due to the rapid rise and new contracts are drying up. We are talking about 60% of the economy, this is not a small glitch that wont mean anything next year. Next year is when the piper will take his due in full.