Shortfall hits $1.6 billion, as economic expansion slows
Thailand’s trade and current-account deficits in April were the worst in nine years, while economic expansion slowed during the month, the Bank of Thailand said yesterday.
In the first four months of the year, the current account swung to a deficit of US$3.1 billion (Bt124 billion). Authorities had earlier called for a current-account surplus for the whole year of between $1 billion and $2 billion.
“There’s a possibility the current account will either register a surplus or a deficit this year. The outcome will depend on economic conditions, oil prices, export growth and tourism receipts,” said Suchada Kirakul, the central bank’s senior director for the domestic economy.
Exports rose 14.8 per cent year on year in April, but imports were also up 33 per cent to post a trade deficit of $1.76 billion and a current-account shortfall of $1.61 billion.
The deficits were also affected by the delivery of two Airbus aircraft worth $243 million, and the importation of steel stock for the automobile industry and mega-infrastructure projects.
Oil imports also soared 60 per cent from the same period last year, reaching 22 million barrels. At the same time, petrol prices rose 60 per cent. Overall, imports in April totalled $9.92 billion, up 33 per cent from the same month last year.
Exports reached $8.16 billion, up 14.8 per cent over April 2004. Export volume, meanwhile, increased by 13.4 per cent, while import volume rose just 1.3 per cent.
Suchada said manufacturing growth in April had fallen to 5.1 per cent year on year, down from 8.2 per cent the previous month.
The fall is thought to be caused by the long Songkran holiday and the effects of severe drought on farms.
Industrial production slowed in April, except for sectors such as beverages, liquor and beer, where production was increased before excise tax was hiked.
The production capacity of local industries dropped to 67.5 per cent in April, compared with 76.6 per cent in March.
Suchada said the current-account deficit had not yet reached a critical level, however, but it was necessary to tackle it seriously by using market mechanism to manage oil prices.
“If the oil price stays at $44-$45 per barrel, the deficit should fall. If we import raw materials and capital goods for exports, the deficit will also narrow,” she added.
Danny Suwanapruti of Singapore-based 4cast Ltd said: “The trade numbers were fairly poor, as indicated by the Commerce Ministry’s customs data . . . the trade deficit was close to $1.8 billion, the largest since 1996”.
“Overall it painted a bleak picture for Thailand,” he said.
Prime Minister Thaksin Shinawatra conceded for the first time last week that the country may not show a current-account surplus this year after achieving unbroken surplus years since 1998, including being $7.3 billion in the black last year.
Thaksin urged the public to save energy starting this month. People are asked to turn off lights at night, and businesses to switch off air-conditioners during lunch breaks. Motorists are also asked drive at speeds below 90 kilometres per hour.
Thaksin also said the government may curb oil imports to tackle the trade and current-account deficits.
Published on June 01, 2005
The Nation, Agencies