The Bank of Thailand has grown more pessimistic, reckoning that the export contraction will extend into the second quarter because of intensifying trade tension between the US and China.
The export contraction for a fifth straight month in May added to the possibility of a second-quarter plunge, said Pornpen Sodsrichai, director of the central bank’s economic analysis office.
Outbound shipments on a balance-of-payments basis tumbled 7.2% year-on-year in May, a deeper slump than April’s 3.1% contraction. May exports fell by 6.1% if gold is stripped out.
For the five months to May, exports were down 4.5% year-on-year.
Ms Pornpen expects shipments to claw back in the second half, given the low-base effect.
The relocation of manufacturing plants from China to Asean, triggered by the Sino-US trade dispute, will also give a boost to Thailand’s exports in the latter half.
“Exports are needed to expand 4.5% a month for the remaining seven months of this year to make outbound shipments swing back to positive in the second half,” she said.
The Bank of Thailand on Wednesday lowered its export view to flat growth this year from 3% predicted earlier and also slashed its GDP growth outlook to 3.3% from 3.8%.
Ms Pornpen said still-contracting exports could be due to weaker global demand, dampened by slower economic growth in a number of major trading economies, protectionist policies between the US and China, the continued downturn in the electronics cycle and the decline in crude prices.
Export contraction was seen in petroleum-related products, automotive and parts (especially passenger and commercial vehicles), electronics products, agricultural products (notably rice and rubber), and agro-manufacturing products.
But exports in some categories continued to expand, including appliances (especially air conditioners and TV sets), agricultural products, and automotive and parts (particularly motorcycles and car tyres).
The economy in May moderated from the previous month, with private consumption the key driver amid ebbing private investment and public spending.
The value of merchandise imports edged down 0.2% in May from the same period last year, mainly due to the sharp contraction of gold value. Excluding gold, the value of merchandise imports grew by 1.1%.
Moreover, foreign tourist arrivals in May fell by 1% from the same period last year, mainly from the drop in tourists from China as a result of the slowing economy there and stronger competition from neighbouring countries.
Commenting on the firmer baht, Ms Pornpen said the US-China trade war, a clearer domestic political picture and the higher weighting of Thai shares in the global benchmark MSCI strengthen the local currency.