Thailand is heading for a second straight year of slumping exports, something the onetime tiger economy hasn’t experienced in at least two decades and a loss that magnifies challenges for the military-run government.
Shipments abroad, which make up the equivalent of about 70 percent of the economy, have shrunk in six out of nine months this year and will probably contract in 2014, according to the central bank. That’s in comparison to an annual average pace of growth of about 13 percent in the period 2002 to 2012, Bloomberg reported.
While Thailand has grappled with political instability and record flooding in recent years, rivals including Vietnam and the Philippines have seen exports climb. Investment proposals for infrastructure have been delayed for months by violent unrest that ended when Prayuth Chan-Ocha, the former military chief, seized power in a May coup.
“It’s possible that exports will lag behind other countries in the region like Vietnam, Malaysia and the Philippines which used to trail us in the past,” said Santitarn Satirathai, a Singapore-based economist at Credit Suisse Group AG.
Gross domestic product expanded 0.6 percent in the three months through September from a year earlier, the National Economic and Social Development Board said in Bangkok Monday. The economy grew 1.1 percent from the second quarter, compared with a median estimate of 1.5 percent.
Thailand’s ranking for innovation in the World Economic Forum’s Global Competitiveness Index fell to 67 in 2014 from 33 in 2007.
Electronics, which made up 14 percent of total Thai exports in 2013, have risen 3.8 percent so far this year compared with an increase of almost 10 percent in 2007.
Production Hub
“Thailand positioned itself as a production hub for hard disk drives for so long, but didn’t do anything to get foreign companies to invest in modern technology,” said Thanomsri Fongarunrung, an economist at Phatra Securities Pcl in Bangkok. “Demand for PCs has fallen with increased demand for smartphones, and we never fully recovered the share lost to other markets after the 2011 floods.”
The NESDB said export value this year will probably be flat, and that it expects the value to grow 4 percent next year. The economy may expand 3.5 percent to 4.5 percent in 2015, the agency said.
The monetary authority kept its policy rate unchanged at 2 percent earlier this month, and Governor Prasarn Trairatvorakul said last week that while the current rate is accommodative for growth, it can be eased further if the economy fails to recover.
The Thai baht was little changed at 32.786 against the U.S dollar as of 10:34 a.m. in Bangkok. It has slipped almost 3 percent against the US dollar in the past three months.
