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Thai Military Faces Tough Economic Challenge after Coup

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Thailand's economy under pressure after coup

Thailand’s economy under pressure after coup

BANGKOK — Thailand’s trade shrank in April and factory output fell for a 13th straight month, data showed Wednesday, underscoring the damage from political unrest and the tough job the new military government faces in reviving the economy.

Exports, which account for more than 60 percent of Thai gross domestic product, fell 0.9 percent in April compared with the previous year, according to Commerce Ministry data.

Imports fell less than projected last month, by 14.5 percent, compared with a Reuters poll’s median of 18.2 percent. But the decline is worrisome, as many of Thailand’s imports go into finished goods that are later exported.

The trade deficit was $1.45 billion, more than twice the forecast $600 million.

Industrial output in April was 3.9 percent lower than a year earlier, the Industry Ministry said. The 13-month streak of annual declines in output is the longest since Industry Ministry data first became available in 2001.

Exports in April to China were 9.5 percent lower than a year earlier, and exports to Japan were down 4.5 percent. Shipments to the United States rose 0.6 percent and those to Europe were up 5.4 percent.

The Commerce Ministry said that in the second quarter, exports could still increase 4 to 4.5 percent from last year, even though shipments for January to April were 1 percent lower than in the first four months of 2013.

The army seized control of the country on May 22, saying it would restore order after nearly seven months of antigovernment protests that have hurt confidence, domestic demand and tourism and delayed public works.

The junta faces an uphill struggle to revive Thailand’s economy, one of the biggest in Southeast Asia. The economy contracted 2.1 percent in the first quarter from the previous three months, and some economists say a recession is unavoidable.

Tourism, which accounts for about 10 percent of the economy, has taken a hit. Consumer confidence is at a 12-year low, weaker than it was even after the floods of late 2011, violent political unrest in 2010 and a deadly tsunami in late 2004. The Federation of Thai Industries said its index of industrial confidence hit a 58-month low in April.

Growth forecasts for Thailand have been cut steadily since the unrest began in November. But some economists think the outlook could improve under the military council, which this week started paying money owed to rice farmers. The council said it would speed up spending and that a new state budget would be created on time.

“Its actions on the rice-buying scheme, the budget and investment plans should bode well for the economic outlook, at least in the short term,” said Thammarat Kittisiripat, an economist with TMB Bank in Bangkok. “We expect better economic activity in the second half, especially in the fourth quarter, along with improving external demand.”

Tim Condon, chief economist for Asia at ING in Singapore, wrote on Wednesday that after the first quarter’s 2.1 percent contraction from the prior period, “a recession looks unavoidable.” He added: “However, the coupmakers are trying to put the economy on the front burner and have paid rice farmers, extended tax cuts and announced accelerated spending on infrastructure projects.”

The output and trade numbers released on Wednesday were the first government data for April. Earlier, the Federation of Thai Industries said that vehicle sales in April had dropped 33.2 percent from a year earlier.

The vital auto sector has slowed since mid-2013 following the end of a state subsidy for car purchases in 2012, when sales surged 81 percent. The unrest has added to carmakers’ problems, and more than 30,000 jobs have been lost this year.

The Thai unit of Honda Motor said last week it had cut production at its Ayutthaya plant to 60 percent because of weak domestic demand. Officials there voiced concerns that sales might fall short of the company’s target this year after months of prolonged political unrest.

The CTNNews editorial team comprises seasoned journalists and writers dedicated to delivering accurate, timely news coverage. They possess a deep understanding of current events, ensuring insightful analysis. With their expertise, the team crafts compelling stories that resonate with readers, keeping them informed on global happenings.

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