Thailand’s Poor Exports Point to Economic Issues
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Recently, exports in Thailand fell by their largest amount since the flooding of 2011 paralyzed the economy. Exports, which equal over 60% of the Thai economy, dropped approximately 7.4% from a year earlier in comparison to a forecast of a 3.6% decline. During the summer of this year, shipments dropped around 0.85%, and the recent data has shown that Thailand’s essential exports are not bringing in the growth the area needs. At the same time, consumption remains weak, leaving many economists to wonder how growth will be generated.
Recently, exports in Thailand fell by their largest amount since the flooding of 2011 paralyzed the economy. Exports, which equal over 60% of the Thai economy, dropped approximately 7.4% from a year earlier in comparison to a forecast of a 3.6% decline. During the summer of this year, shipments dropped around 0.85%, and the recent data has shown that Thailand’s essential exports are not bringing in the growth the area needs. At the same time, consumption remains weak, leaving many economists to wonder how growth will be generated.
Imports are also coming up to their sixteenth month of decreases in a row, and August saw a fall of five times more than expected. The forecasted percentage was 2.85%, but the drop actually startled economists at 14.17%. Often, imported materials are used in Thailand to assemble complete products before those products are then shipped out again. As a result, a drop in imports has led to reduced shipments across the board. Purchases have been slow throughout raw materials and capital goods and this has prompted a slowdown in domestic consumption, too.
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The Demand for New Measures
Economists have suggested that the growth pillars of Thailand will remain unstable. As a result, the government must take further action to revive the second-largest economy in Southeast Asia. Perhaps the most crucial step for the government to take currently is to work out a clear plan. They need to decide what will be done, how changes will be made, and what timeline they will be following.
New Money Ready to Burn
Cabinet ministers have suggested that the government is planning further measures for Thailand that include speeding up government disbursements in an effort to improve growth. However, this does not mean injecting new money, but rather using existing funds. Apparently, there is still around $3 billion worth of funds that exist from previous years that could be spent.
Not so long ago, the bank of Thailand was forced to cut down its export growth prediction from three percent to zero. Despite the serious problem that the Thai economy is facing, the central bank has retained its estimation that growth will expand by 1.5% this year. The only way that the economy will be able to survive is by having the government increase spending. In the initial eight months of this year, exports within Thailand have fallen by as much as 1.36% from the year before.
If Thailand wanted to clean up its image (which could generate economic growth) it would attack its child pornographic industry. Thailand has a serious problem in child trafficking and so on.
Looking Forward to a Solid Future
The ministry has suggested that the key factors contributing to the export drop could be weaker oil and gold exports. This weakness may have emerged from lower commodity prices, and a high base effect, especially in regards to rubber. Experts are suggesting that the economic recovery in Thailand could be a lot slower than they had originally expected, but there is hope that the economy will return to a potential GDP growth of around 4.5% in 2015. This is like Harry Potter numbers compared to the dismal state California is in.
If Thailand can clean up its act, it could be a bright site in which international companies could operate. But the competition in the world is fierce.
