Thai exports are likely to hit rock bottom in the first quarter with a contraction of 4%, says Deputy Prime Minister MR Pridiyathorn Devakula.
The predicted sharp drop is attributed largely to the slower-than-expected global economic recovery and Thailand's lower competitiveness.
"The drop in exports is not that surprising because the world's economy did not yet recover by the first quarter," he said at a seminar held Wednesday by the Thai National Shippers' Council (TNSC). "And more importantly, the country's sluggish economy does not stem from political upheaval but from low competitiveness in the manufacturing sector compared with other Asean members after the daily minimum wage hike to 300 baht."
Late last month the Commerce Ministry reported exports fell for a second consecutive month in February, down by 6.14% year-on-year to US$17.2 billion after January's figures fell by 3.46% to $17.2 billion. The dip was mainly attributed to lower global oil and crop prices.
Shipments of farm products fell by 12.5% in February to $2.49 billion, particularly rubber, which decreased by 38.8%.
Other major products including rice, sugar and canned and processed seafood also saw big declines in exports in February.
Industrial product exports including gold and oil fell by 3.7% to $13.8 billion.
Gold exports plunged 66% as traders delayed shipments and shifted their focus to imports for speculative purposes, while oil shipments fell by 6.1% from February 2014.
However, imports edged up 1.47% to $16.8 billion, leading to a trade surplus of $390 million compared with a deficit of $457 million in January.
For the first two months, exports totalled $34.5 billion, down 4.82% year-on-year, with imports down 6.69% to $34.5 billion.
He predicted Thai exports would remain in the red in March, but gave no figures.
For the full year, the deputy prime minister was positive the country's exports would stay in a range of 0-1% growth.
Earlier last month, the same factors prompted the TNSC to slash its export forecast to flat growth this year from 1.5% growth.
Thailand's exports dropped by 0.41% last year to $228 billion, the second straight year exports fell after a 0.3% contraction in 2013.
"After the first quarter, exports are unlikely to be an area of concern. The momentum of consumers' consumption recovery and the government's accelerated spending are expected to help drive economic growth this year," said MR Pridiyathorn.
He said private consumption was returning as indicated by higher value-added tax collection in the first quarter, an increase of 9.75% from the same period last year.
The government's disbursement in the first six months of fiscal 2015 increased to 51% of the total fiscal budget, said MR Pridiyathorn.
"I'm not worried so much about Thai economic prospects, as statistics showed promising private consumption and government disbursement trends," he said. "I also expect private investment to recover thanks to higher raw materials imports in February."
He expected the Thai economy would grow by 2.3% year-on-year in the first quarter.
Thailand's economy contracted 0.5% in the first quarter of 2014 before recovering to 0.4% growth in the second quarter, 0.6% growth in the third quarter and 2.3% growth in the fourth quarter.
MR Pridiyathorn said Thailand's long-term economy was also promising thanks to the government's restructuring of industry and the new investment strategy from the Board of Investment that shifts privileges to support high technology, innovation, and research and design.
The government's digital economy drive is also expected to be an instrument pushing Thai export growth over the next two years, he said.
In a related development, MR Pridiyathorn said the new tax incentives for regional headquarters and international trading companies were expected to be announced soon in the Royal Gazette.