BANGKOK, Jan 27: Thai exports fell for a second straight year in 2014, showing how the economy has not gained traction since the army took power in May and increasing the chance the central bank will face more pressure to cut interest rates.
On Tuesday, the Commerce Ministry reported that exports in December rose 1.9 percent from a year earlier, well above the 0.5 percent gain seen in a Reuters poll. But for all of 2014, exports were 0.4 percent lower than the previous year, when there was an 0.3 percent contraction. Imports in December were down 8.7 percent, far more than the poll’s projected 2.45 percent, while for the full year they tumbled 9 percent.
Exports and domestic demand are the two main engines of Thai growth, and neither fired well last year. The government will report economic growth for the year – likely to be only around 1 percent and the weakest since flood-hit 2011 – on Feb. 16.
In May, after political tensions that began in late 2013, the military took power, saying this was needed to restore order and spark a recovery for Southeast Asia’s second-largest economy.
The coup restored some confidence, but domestic consumption has remained tepid at best, and government spending has not gotten firmly on track. RECORD RICE SHIPMENTS
Exports, which equal more than half of the country’s gross domestic product, remained flat. At the start of 2014, authorities expected exports to increase at least 5 percent. The ministry said exports in December were helped by record high rice shipments, up 67 percent from a year earlier, and a 4.5 percent rise in industrial goods. But shipments to China were down 19 percent in the month, and 8 percent for the whole year. Exports to the U.S. rose 13.2 pct last month and 4.1 percent during 2014. The trade data comes one day before the Bank of Thailand’s monetary policy committee holds its first meeting of the year.
A Reuters poll found that 16 out of 20 economists believe the benchmark rate will be held at 2.0 percent, where it’s been since March.
Last Friday, Finance Minister Sommai Phasee said the central bank should cut interest rates to help the sputtering economy.
(AGENCIES)
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