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Published on March 21, 2008

However, a substantial rise in exports has kindled hopes that strong growth abroad will help contain the shortfall.

The Kingdom posted a trade deficit for two consecutive months. February's shortfall of US$688.9 million (Bt21.58 billion) made a combined deficit of $1.3 billion for the first two months of the year.

The Commerce Ministry says the trade balance dipped into the red for the first time in 17 months in January, when imports soared 49 per cent year on year against export growth of 33.2 per cent.

Last month, the value of exports reached $12.99 billion, up 16.4 per cent year on year. However, imports were valued at $13.68 billion, up 33.1 per cent year on year.

Commerce Minister Mingkwan Sangsuwan said the high imports were due mainly to business operators foreseeing an opportunity to expand their businesses because of economic recovery and growth.

"The ministry will not control imports to ensure a surplus account despite the high imports causing a trade deficit," he said.

Prompted by the strong baht, industrialists are also importing new machinery and raw materials, to increase their future production capacity, he said. Although this lifts the level of imports, it will return in higher exports in the long term, so the government will not curb imports at present.

Mingkwan said he was optimistic Thailand would achieve its target of 15-per-cent growth in exports to B175 billion this year.

The Commerce Ministry reported imports of crude oil surged 66 per cent in value to $2.38 billion last month, while import volume fell 9.94 per cent.

Imports of capital goods rose 23.3 per cent year on year, while imports of raw materials surged 29.4 per cent.

Aat Pisanwanich, director of the University of the Thai Chamber of Commerce's International Trade Studies Centre, said high imports would bring down Thailand's trade surplus to only $7 billion or $8 billion this year, from $12 billion last year.

"Even though we have robust imports, that is not a negative sign that will harm the Kingdom's economy. It will only reduce the trade surplus. The underlying improvement of exports will diminish the impact of high imports and should ensure that the economy grows 5 per cent this year," Aat said.

The Commerce Ministry said exports should increase continuously this year, because of its efforts to stimulate trade in potential new markets, particularly in new emerging economies.

Last month, the value of exports to all markets rose, particularly to traditional markets, including 9.4-per-cent growth year on year in the value of exports to the US. Exports to new markets grew 2.4 per cent.

Meanwhile, one of the world's largest retail groups, the French-based Casino Group, has announced it will increase imports of Thai fruit 50-fold to 1,000 tonnes this year, in order to supply more than 9,000 outlets in France and around the world.

Jean Prevost, an adviser to the group, said the firm was expected to double that figure if a promotion campaign with the Thai Commerce Ministry was effective in increasing consumption of Thai fruit.

Casino is the operator of Big C and Leader Price in Thailand. The global group generated more than Bt1.1 trillion in sales last year.

Petchanet Pratruangkrai

The Nation