Unexpected fall in Thailand's October exports adds to gloom

BANGKOK: Thailand's customs-cleared exports unexpectedly dropped in October after two months of gains, adding to pressure on the struggling, trade-reliant economy in the face of tepid global demand.

Exports, worth about two-thirds of the Thai economy, have contracted the past three years, placing a big drag on the military government's attempts to revive Southeast Asia's second-largest economy.

Domestic consumption also remains sluggish, despite the junta's efforts to to boost demand since it seized power in May 2014 to end months of political turmoil.

Exports fell 4.2 percent from a year earlier, commerce ministry data showed on Monday, compared with the median forecast for a rise of 2.15 percent in a Reuters poll and a 3.4 percent increase in September.

"This suggests a fragile recovery in exports and it's difficult to see positive exports this year," said Sarun Sunansathaporn, an economist at Bank of Ayudhaya.

"But exports should improve next year as commodity prices stabilise and export quantity increases," he said. "Higher imports will also benefit future exports."

Imports in October rose a better-than-expected 6.5 percent from a year earlier. Economists had expected a rise of 3.6 percent after an increase of 5.6 percent in September.

Imports of raw materials rose 17.46 percent in October on-year, led by electronics parts, chemical products, while consumer goods rose about 2.6 percent.

Many of Thailand's imports are assembled into finished goods and shipped out again.

Last week, the state planning agency predicted exports would be flat this year, rather than fall 1.9 percent as previously projected. It expected the economy go grow 3.2 percent this year, up from 2.8 percent last year.

The export decline in October was due to slow global trade, weaker shipments of gold and oil products, and the fall was magnified by comparison with last year's high base, senior ministry official Pimchanok Vonkhorporn told a briefing.

In January-October, exports dropped 1.0 percent on-year but the ministry hopes for a small rise in shipments this year.

"We are still confident that exports will show good growth in the last two months, as many factors are on the upside, such as farm product prices and oil prices," Pimchanok said.

Last month, Thai exports to the United States, Thailand's biggest market, dropped 4.7 percent from a year earlier, while those to Europe slumped 9.2 percent.

But shipments to Japan rose 8.9 percent on-year and ones to China increased 4.4 percent.