BANGKOK: Thai exports in August fell by the biggest percentage since bad flooding in late 2011, confirming that a key engine of the country's economy is not firing.
Exports dropped 7.4 percent from a year earlier, Commerce Ministry data showed on Monday, compared with the forecast of a 3.6 percent decline in a Reuters poll. In July, shipments slipped 0.85 percent from a year earlier.
On Friday, the central bank scrapped its earlier forecast of 3 percent export growth this year and said it now expects no increase at all. Exports are equal to more than 60 percent of the Thai economy.
Despite expecting zero export growth, the central bank maintained its forecast that the economy will grow 1.5 percent this year, as long as the government boosts spending.
On Monday, the Commerce Ministry said it now hopes 2014 exports will grow 0.5-1.0 percent, instead of its earlier 3.5 percent.
In May, the army seized power to end prolonged political unrest that put the economy on the verge of recession early this year.
In June, exports rose for the first time in four months, on an annual basis, but they declined in the next two months.
The ministry said key factors for the August export drop were weaker gold and oil exports due to a high base effect, and lower commodity prices, especially for rubber.
"It looks like the recovery is a lot slower than we expected," said Kampom Adireksombat, a senior economist with Tisco Securities, who has forecast 2 percent export growth this year.
In the first eight months of 2014, exports have fallen 1.36 percent from a year earlier.
Imports fell for a 14th straight month in August, and by five times as much as the poll expected. They plunged 14.17 percent from August 2013, compared with a forecast of 2.85 percent drop in August.
BODES ILL FOR FUTURE
Many imported materials are assembled into completed products and shipped out again. So a slump in imports bodes ill for future shipments.
In August, Thailand recorded a trade surplus of $1.15 billion, compared with a forecast deficit of $300 million and a July deficit of $1.1 billion.
Exports to the United States slipped 0.3 percent in August from a year earlier (from +4.5 percent in July), while those to Europe were down 5.4 percent (+7.3 percent in July) and Japan off 7.6 percent (+3.3 percent).
Shipments to China plunged 14.4 percent in August, compared with a fall of 1.7 percent a month earlier and ones to Southeast Asian countries were flat (-5.2 percent in July).
Thailand avoided a technical recession by having slight on-quarter growth in April-June after a contraction of 1.9 percent in the first three months of 2014.
The Bank of Thailand's policy rate has been at 2 percent since March. Most economists expect no change for the rest of the year.
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