Thai Oct exports beat forecast in early sign of recovery

BANGKOK: Thailand's exports rose for a second straight month in October, adding to evidence the trade-reliant economy is gaining a stronger footing after months of political unrest and suggesting that interest rates may not be cut soon.

Southeast Asia's second-largest economy has been grappling with weak shipments and sluggish domestic activity even after a coup in May ended the turmoil.

The military government, banking on infrastructure projects to help the economy, has trimmed its GDP outlook as badly hit sectors recover slowly.

Commerce Minister General Chatchai Sarikulya told a news conference he expected exports to be positive this year "but with growth of less than 1 percent."

Exports in October rose 3.97 percent from a year earlier, their highest growth rate since January last year, the Commerce Ministry said. Exports account for over 60 percent of GDP.

That compared with a 0.8 percent rise in a Reuters poll and a 3.19 percent increase in September. The ministry said exports in October were helped by higher shipments of cars and auto components, as well as rice.

Exports to Japan in October rose 4.1 percent, and were up 6.4 percent to the United States, 8.5 percent to Europe and 7.2 percent to ASEAN countries.

Shipments to China fell 7.8 percent. However, annual imports in October fell 4.88 percent after a rise of 14.4 percent in September, and were weaker than market forecasts of 1.7 percent. Through August, imports have fallen for 14 months in a row which may have a bearing on future exports.

The ministry cited a big fall in crude oil and gold imports.

Although challenges remain, Tim Leelahaphan, economist with Maybank Kim Eng, said: "The rise in exports makes us continue to believe exports will pick up more in 1H15 - especially compared to earlier this year when political stability was unresolved."

"We will continue watching some obstacles to Thai exports - those are weaker external demand, especially China, and the falling prices of rice and rubber," he said.

Bernard Aw, economist with Forecast Pte in Singapore, said barring a sharp deterioration in the economy, the central bank was unlikely to cut interest rates in December.

"We expect the central bank to adopt a cautious stance and conserve ammunition till the first quarter of 2015."