Exports contract by nearly 25 per cent with no tourist arrivals in June, says the central bank

The Thai economy has improved in June but export value still contracted by nearly 25 per cent as there have not been any foreign tourist arrivals at all, the Bank of Thailand (BOT) said on Friday. 

Apart from the severe contractions in exports and tourism, private consumption and manufacturing also continued to decline in June but at a slower rate when compared to May. 

Exports

The BOT said exports have shrunk by 24.6 per cent year-on-year. However, excluding gold, exports actually contracted by 18.4 per cent in June when compared to its contraction of 29 per cent in May.

Don Nakornthab, the BOT’s senior director of its Economic and Policy Department, said this was due to the improving economic activities of trading partner countries after the relaxation of lockdown measures. 

However, the contraction rate remained high, especially for automotive parts, machinery equipment, and petroleum-related products. 

For the first six months of 2020, export value decreased by 17.8 per cent, minus 29 per cent if excluding gold.

Import value also contracted by 12.3 per cent in the first half of 2020.

Tourism

For tourism, Don said that there have not been any foreign tourist arrivals in June for the third consecutive month due to Thailand’s inbound travel restrictions. 

Private consumption declined at a slower rate in June when compared to May as spending in all categories improved as a result of the easing of lockdown measures. 

However, the contraction in private consumption indicators is still high which is in line with weak household income and low consumer confidence.  

From year to date, around 6.7 million foreigners have visited Thailand, representing a drop of 66.2 per cent year-on-year. 

Manufacturing production

Manufacturing production also contracted at a slower pace in June which is consistent with the improvement of exports and private consumption, Don said. 

The manufacturing production index (MPI) declined by 17.7 per cent year-on-year in June, in comparison to the reduction of 23.8 per cent in May. 

For the first six months of 2020, the MPI contracted by 12.9 per cent year-on-year.  

Private investment 

Private investment indicators shrank at a slower pace in June as well when compared to May due to the improvement of investments in machinery and equipment, the number of newly registered motor vehicles, and imports of capital goods.

However, the contraction rate is still high due to weak domestic and external demand, high excess production capacity, and fragile business sentiment despite the slight improvement. 

The BOT’s private investment index also weakened by 12.1 per cent in June compared to the minus 18.2 per cent in May.  

For the first six months of 2020, the index dropped by 10 per cent year-on-year. 

Public spending 

Public spending, excluding transfers, expanded in June, both from current and capital expenditures.

Current expenditures slightly expanded while capital expenditures significantly increased from the disbursement for road maintenance. 

Nevertheless, the state enterprise’s capital expenditures decreased slightly by 0.2 per cent from an expansion of 15.4 per cent in May to an expansion of 15.2 per cent in June.

July

For July, the BOT said there are fewer impacts from the lockdown on businesses.

According to the central bank’s survey in July, 21 per cent of the 297 exporters said they are no longer affected by the restriction’s measures, and about 17 per cent said they were not affected in June.

Around 30 per cent of the businesses also said that they are no longer being affected by social distancing measures compared to the 22 per cent in June. 

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