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Current account surplus hits US$8.3 bn in Q1 amid economic downturn

The economic slump will push the current-account surplus up by US$700 million more than had been predicted in March.

The C/A surplus is due to surpluses in merchandise trade and services.

Roong Mallikamas, spokeswomen for the Bank of Thailand, said yesterday that lower imports of capital goods and gold had led to the trade surplus while lower dividends and repatriated profits had led to the surplus in the service account.

The current-account surplus grew to $8.2 billion (Bt265 billion) in the first quarter of this year.

The trade surplus is largely due to falling imports while exports remain stable. The drop in imports of capital goods is in line with the slowdown in domestic investment. Most operators only care about maintaining their equipment, not expanding their business.

"Investments in new projects that cost more than investment in maintenance are delayed at the present time," she said.

Last year, a record $11.6 billion worth of gold was imported, mainly in the first quarter when demand was strong from people seeking a safe-haven asset.

There was no net import of gold in the first quarter of this year.

The decline in gold purchases has no connection with the slowdown in production while imports of raw materials are still stable, which means "there is nothing to worry about" regarding a long-term effect on the export sector, she said.

The slowdown in crude-oil imports is because of the maintenance under way at many refineries, which led to lower demand. This means that the slowdown in oil imports is only temporary and will not affect the export sector in the long run either.

The slowdown in dividends and profits is caused by the slowdown in the economy. Economic growth in the last quarter of 2013 was not as good as in 2012 and at the beginning of 2013.

"The surplus in the current account is caused by the slow growth in economic activities, especially investment. But when the investment environment returns to normal, I believe that the surplus will gradually come down," Roong said.


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