Thailand posted its widest trade surplus in 18 years in February as demand continued to sink in face of the global recession.
The trade surplus in February widened to $3.58 billion from $1.38 billion a month earlier while imports plummeted 40.3%, the sharpest drop in 11 years. The decline follows January's 37.6% decline, according to Siripol Yodmuangcharoen, the Commerce Ministry's permanent secretary.
The steep import fall means lower demand for raw materials among manufacturers and falling oil prices which averaged US$40 per barrel compared with $100 in the same month last year.
Thailand imported 22.86 million barrels of oil in February worth $1.052 billion. The volume and value were down by 10.7% and 56.3% respectively.
Imports of capital goods fell 16.1%, with machinery down 14.1%, computers by 32.5%, and semi-finished and finished materials by 48.8%, mainly because of the shrinking demand among buyers who have been hard hit by the world economic slump.
The big fall in imports triggered by decreasing imports of raw materials and capital goods signals that manufacturing for exports is likely to decline in the coming months, said analysts.
Exports, which make up 70% of the economy, sank for the fourth consecutive month by 11.3% from a year earlier to $11.73 billion. Demand for electronics, auto parts, electrical appliances and agricultural and agro-industrial products has dried up.
Shipments of agricultural and agro-industrial products fell 10.5% to $1.81 billion, while those of industrial goods were down by 6.7% to $8.40 billion.
According to Mr Siripol, the February exports were also boosted by high gold prices which prompted Thai investors to sell the precious metal shipped to Hong Kong and other markets. Gold exports surged 1,148% last month to $1.86 billion from $781 million in January. Exports of jewellery and ornaments as a result rose 402.7% in February, earning $2.15 billion.
For the first two months, Thailand's exports fell across all sectors by 19.2% to $22.23 billion from the same period last year, mainly due to sluggish demand.
Imports for the period fell 38.9% to $17.27 billion in all categories especially energy (54.78%), capital goods (23.8%) and raw materials (45.3%). As a result, the trade surplus widened to $4.95 billion.
Aat Pisanwanich, director of the Centre for International Trade Studies of the University of the Thai Chamber of Commerce (UTCC) said he was a bit surprised to see big improvements in February's exports although the world economy was still mired in the downward spiral.
"The improvements ... could have been due in large part to re-exports of gold following a surge in gold prices and the weakness of the baht, which fell to 35-36 baht compared with 32-33 baht in the same period last year," he said.
Meanwhile, the farm sector could become the latest victim of the global crisis as its growth this year is expected to fall to 2.7% from earlier predictions of 3% to 4%.
Apichart Jongskul, secretary-general of the Office of Agricultural Economics, said the office had revised down the growth forecast after the performance in the first quarter was worse than expected, with only 1.5% expansion, compared with 1.8% in the fourth quarter of 2008.
He attributed the decline to smaller farm output, export declines and shrinking food consumption in the sluggish global economy.