BANGKOK—Thailand showed a modest improvement in domestic consumption and demand for imports in September, but weak exports hurt private investment and factory output, the Bank of Thailand said Friday.
The Private Consumption Index edged up 1.2% compared with the same period last year. Higher confidence and income among nonfarm households translated into increasing spending on food, beverages and other nondurable items.
Low prices of rubber and rice—Thailand’s main agricultural export products—and high levels of household debt hurt rural purchasing power and spending on durable items, the Thai central bank said.
Exports grew 2.2% overall last month on the back of higher shipment of petrochemical products, machinery and equipment, and electrical appliances, the bank’s data showed. However, slow recovery in global economy weakened demand and added extra risks to exports, whose value went down 0.7% in the first nine months from the same period last year.
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“We still see ups and downs in our key economic indicators, but overall, we view that the economic improvement is gaining pace, gradually,” said Roong Mallikamas, senior director of the Macroeconomic and Monetary Policy Department.
Weak exports resulted in lower production levels of export-oriented items to run down stocks. A slump in the output of hard-disk drives—down 23% from August—weighed on manufacturing production. The index fell 3.9% on-year, although production in most industries expanded in line with a recovery in domestic demand.
The Private Investment Index contracted 5% on-year due to lower investment in construction, machinery and equipment.
Imports of capital goods, raw materials and consumer goods increased. Excluding gold purchases from abroad, imports grew 7.6% last month, according to the bank’s monthly economic report.
The country’s current account recorded a deficit of $0.9 billion, driven by a surge in import demand.
The Bank of Thailand said it aimed to revise its growth forecast for the country’s gross domestic product later this year from the current 1.5% rate. The Finance Ministry on Thursday lowered the growth rate to 1.4% on weak exports and tourism.
“We expect more of a pickup in [the fourth quarter], when the peak tourism season begins,” says Barclays’ economist, Rahul Bajoria. “We see the growth recovery as being slow.”
Tourist arrivals from Asia, especially from China, helped the sector to improve gradually, but the number of foreign tourists remained below average. Many countries still maintained travel advisory warning to Thailand as the military’s martial law has remained in place since before the May 22 military coup.