Thai unrest hits economy

For January, the trade deficit was $2.52 billion, compared with the poll’s forecast for a gap of $850 million.

For January, the trade deficit was $2.52 billion, compared with the poll’s forecast for a gap of $850 million. Picture: AFP.

BANGKOK - Thai exports fell in January and imports slumped, reflecting the deepening toll prolonged political unrest is taking on the economy and increasing pressure on the central bank to cut already-low interest rates.

The Commerce Ministry said on Tuesday that exports fell 1.98 percent in January from a year earlier, compared with the forecast in a Reuters poll for zero growth. In December, exports rose 1.87 percent.

Imports fell 15.5 percent from a year earlier, less than the 20.7 percent drop seen in the poll but the biggest fall since October 2009.

Imports were lower in most sectors, with machines and parts down 16 percent year-on-year, computers and parts down 19 percent, auto parts down 31.8 percent, steel products down 14.3 percent and consumer goods down 5.3 percent.

For January, the trade deficit was $2.52 billion, compared with the poll's forecast for a gap of $850 million.

Exports, which account for more than 60 percent of Thailand's economic output, were weak throughout 2013, and fell 0.3 percent for the year. Imports were also weak last year, rising just 0.3 percent.

Poor trade numbers last year crimped Thai growth, which was only 2.9 percent compared with 6.5 percent in 2012 when Thailand was rebounding from devastating floods.

Thailand is a regional hub and export base for top global carmakers and a major producers of hard disk drives.

The Commerce Ministry said key exports were slow to recover and it expected an improvement in the second quarter. For this year, the ministry has forecast a rise of 5 percent.

The data came out shortly after the latest episodes of violence in Thailand, which has increased worries of clashes between supporters and opponents of embattled Prime Minister Yingluck Shinawatra. Early Tuesday, there was gunfire and an explosion near one antigovernment protest site, and medical sources said two men were wounded.

At least 20 people have been killed and more than 700 wounded since the protests began in November.

Protesters trying to oust Yingluck disrupted and boycotted the 2 February election. Thailand has in place a caretaker government that has little spending power to help the economy.

The central bank has forecast economic growth of about 3 percent or even lower for this year while some economists now predict just 2 percent.

At a meeting in January, the central bank's monetary policy committee (MPC) unexpectedly kept the policy interest rate unchanged at 2.25 percent, a three-year low. But the vote was 4-3, with three members wanting a cut.

But with key economic engines weakening and the unrest dragging on, some economists think the MPC is likely to cut the rate at its next meeting on 12 March.