Exports Provide Tonic in November: Current Account Hits Six-Year High

By Parista Yuthamanop, Bangkok Post, Thailand

Dec. 30–Economic growth remained stable in November, with strong export gains helping mitigate slowing domestic demand, according to the latest data released by the Bank of Thailand.

Amara Sriphayak, the senior director of the central bank’s domestic economy department, said the country’s trade surplus rose on slowing imports and continued gains in exports.

Exports in November were valued at $11.76 billion, up 21.8 percent from the year before, compared with imports of $10.49 billion, up 6.3 percent year-on-year.

The November trade surplus totalled $1.26 billion, an increase from $723 million in October. Gains in services income pushed the current account surplus to $1.51 billion in November, a six-year high and up from $856 million in October.

Mrs Amara said that for the first 11 months of the year, the current account recorded a surplus of $2 billion, well above original forecasts of a deficit of $700 million to $2.7 billion for the year.

Exports in November showed a 10.7 percent increase in volume and a 9.9 percent increase in prices from the year before, with agriculture, fisheries and high technology all posting strong gains.

November imports remained relatively sluggish, with oil imports rising just 2 percent from the year before compared with 24.3 percent year-on-year growth in October.

Imports of capital goods rose 12.3 percent in November compared with a 7.1 percent year-on-year decline the previous month, but the figure was skewed by $430 million in aircraft imports by Thai Airways International. Excluding the aircraft, capital goods imports dropped 0.1 percent in November from the year before.

Mrs Amara said weak imports reflected poor investment trends, but noted that producer confidence had begun to improve in November.

Economic growth for the full year is expected to be in the upper range of the central bank’s current forecast of 4.5 percent to 5 percent, thanks primarily to stronger-than-expected exports.

Mrs Amara said November exports continued to expand despite the stronger baht, due in part to steady expansion of the global economy. Domestic demand is projected to pick up in 2007, due to easing inflation trends and projections that farm income will remain high.

Manufacturing production rose 7.6 percent in November from the year before, with growth rising from October’s growth rate of 5.7 percent thanks to expanded production in the export-oriented electronics sector and inventory stocking in the beverage sector ahead of the year-end holidays.

Construction, steel and petroleum all posted gains in November from last year due to base effects. Capacity utilisation in November was 73 percent, unchanged from the previous month.

Private consumption in November rose 1.1 percent year-on-year, down from 1.3 percent in October. Car and motorcycle sales slowed due to the impact of widespread floods, while imports of consumer goods also fell due to high base effects last year.

But the central bank noted that other indicators, including value-added tax receipts, household electricity usage and fuel usage, showed increases in November. Private investment rose by 1.3 percent in November from last year due to stronger domestic cement sales and commercial car sales, although capital goods imports remained weak.

Tourism and services income continued to rise in November, with tourist arrivals increasing 2.4 percent year-on-year.

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