Economic recovery facing severe challenges

BANGKOK (AFP): Thailand’s nascent economic emergence from the depths of the crisis is in jeopardy. Recently released indicators provide stark evidence that falling exports are crippling the recovery. The slump has been spurred by a decline in demand in the United States as the economy there slows, but it also reflects a failure to stimulate fresh investment, analysts say. “Foreign investors still lack confidence in the Thai market as they watch the economic recovery lose speed,” said an analyst with Nava Vickers Ballas. “The government needs to stimulate investment if it wants to see real recovery. It must tailor policy and rebuild hopes of a recovery before foreign money returns in any strength.” January central bank data saw the trade account, the manufacturing index and the production index decline, while falling exports and more imports saw Thailand post its first trade deficit for 11 months. January exports were down 3.9 percent year-on-year at 5.04 billion dollars, after reaching 5.753 billion a month earlier, while imports shot up 31.3 percent year-on-year to 5.323 billion dollars. “If exports continue to weaken, the current account this year may post a deficit” and create problems in the financial market, noted Chalongphop Sussangkarn, a member of the Bank of Thailand’s monetary policy board. The slowdown in exports is being felt elsewhere in the economy, because as exports fade, the problems are compounded by a slowdown in foreign investment, analysts say. Higher oil prices are also damaging import-dependent Thailand. Waraporn Wiboon-kanarak, a researcher with Seamico Securities said: “The increase in oil prices and the baht’s depreciation have combined to drag investment down.”