UPDATE 1-Fall in Thai exports adds to woes as political tensions mount

Orathai Sriring
Tuesday, 26 Nov 2013 | 10:58 PM ET

* Oct exports drop 0.7 pct y/y, poll had seen rise of 0.7 pct

* Export machine still sputtering as political tension rises

* Imports were down 5.4 pct y/y in Oct; trade deficit was $1.77 bln

BANGKOK, Nov 27 (Reuters) - Thai exports fell again in October, showing that a cornerstone of the country's economy remains weak at a time political tension in Bangkok is spooking some foreign investors.

The trade data comes as protesters trying to oust Prime Minister Yingluck Shinawatra have occupied several government ministries.

The Commerce Ministry reported on Wednesday that exports in October were 0.7 percent below a year earlier, compared with a Reuters poll for a gain of 0.7 percent last month.

In September, exports were 7.1 percent lower than a year before. Exports account for more than 60 percent of the Thai economy, and since May, only one month has seen an increase from the previous year - August's 3.9 percent gain.

For the first 10 months on 2013, exports have slipped 0.02 percent.

The Commerce Ministry blamed a weak yen, low commodities prices and weak demand for electronics due to changes in computer technologies.

Exports can still rise 1 percent this year and in 2014 "we hope to get 5 percent growth as other major countries are expected to improve," Urawee Ngowroongrueng, deputy permanent secretary of the Commerce Ministry, told reporters.

At the start of this year, Thai officials had hoped for a 9 percent rise this year, but forecasts have been whittled down as global demand remained weak.

In October, imports fell 5.37 percent from a year earlier, less than the 8.17 percent drop forecast in the poll.

Among the ministries that protesters have occupied or surrounded are the Finance Ministry. The prime minister is facing a no-confidence vote in the parliament that she is expected to easily survive.

Rising political tension has hurt Thai financial markets as foreigners sell stocks and bonds. On Wednesday, the baht eased slightly to 32.03, after touching an 11-week low of 32.090 on Tuesday.

But there are few signs so far that the political tension is impacting the broader economy.


ING said it expects damage to the economy and markets "to be transitory", similar to much larger anti-government protests in March-May 2010.

The main economic contrast between now and 2010, ING said, is "back then the economy was on a solid footing as evident from a 10.6 percent y/y GDP growth in the first half of 2010, which prevented a significant damage to confidence. With the growth this year stuck in low single-digits, the escalation of tensions could result in a severe damage to the confidence."

This year's weak exports have significantly dented growth. The economy contracted earlier this year.

Last week, the National Economic and Social Development Board cut its 2013 GDP estimate to 3 percent from 3.8-4.3 percent. On Oct. 25, the central bank lowered its growth forecast for this year to 3.7 percent from 4.2 percent and its 2014 projection to 4.8 percent from 5.0 percent.

Later on Wednesday, the Bank of Thailand's Monetary Policy Committee (MPC) will hold a policy meeting at which it is expected to keep the benchmark interest rate at 2.50 percent, where it has been since a 25 basis point cut in May.

(Additional reporting by Kittiphong Thaichareon; Editing by Richard Borsuk)