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April trade deficit at 12-year high


May 31, 2008

April trade deficit at 12-year high

Soaring oil imports pushed Thailand's trade deficit to its highest level in 12 years in April, while the current account deficit reached its widest point since mid-2005, Reuters reported Friday, quoting the country’s central bank data.

April imports jumped 41.5 percent from a year earlier to a record $15.4 billion, saddling the country with a $1.77 billion trade deficit, the biggest since May 1996.

Early customs data showed last week petroleum imports, which account for 21.5 percent of total imports, surged 88.1 percent in April from a year earlier.

Despite a healthy 27.7 percent annual rise in exports, Thailand posted a $1.66 billion current account deficit, the first in a year and the highest since mid-2005.

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Some economists said the April data was partly lifted by still robust exports, but rising inflation and political tensions may hurt the economy in the months ahead.

"The overall April figures were good. Exports continued to grow although the country had a current account deficit," economist Aksarapak Wongcharoen of Tisco Securities said.

"The upcoming May figures will not be as good as April largely because we are starting to see political tensions rise along with inflation," she said.

Political tensions rose this week after a government move to amend a military-backed constitution adopted after a 2006 coup triggered street protests on Sunday by opponents of former Prime Minister Thaksin Shinawatra. Critics say the charter revisions would benefit Thaksin, who is fighting corruption charges.

"The broader economic number for the month was not a surprise. All eyes are now on inflation data for May due on Monday," economist Nuchjarin Panarode of Capital Nomura Securities said.

"If it is in line with the consensus 6.5 percent or higher, the Bank of Thailand is more likely to consider raising its policy rate at its mid-July meeting," she said.

Oil-fuelled annual inflation accelerated to a 2-year high of 6.2 percent in April, and it may near a 10-year high of 6.5 percent in May, according to analysts surveyed by Reuters.

The NESDB, Thailand's state planning agency, said it expected 2008 inflation to average 5.3 to 5.8 percent, up from its previous forecast in February of 3.2 to 3.7 percent.

An inflation rate of 5.3 percent would be the highest since 1998, when inflation averaged 8.1 percent. The central bank has held interest rates steady at its last seven policy reviews after five rate cuts in 2007.

The benchmark rate was left unchanged at 3.25 percent last week, but the bank said it was ready to raise rates if inflation picked up.

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