(Recasts, adds details and comments)
* Exports in April -0.87 pct y/y, imports -14.5 pct y/y
* April factory output -3.9 pct y/y vs -6.4 pct in Reuters
* Annual output falls for a 13th consecutive month
* January-April output -6.36 pct y/y, exports -0.97 pct y/y
By Orathai Sriring and Kitiphong Thaichareon
BANGKOK, May 28 Thailand's trade shrank in April
and factory output fell for a 13th straight month, underscoring
the damage political unrest has caused and the tough job the new
military government faces reviving an economy that contracted in
the first quarter.
The army, which seized control of the country on May 22, has
begun a battle to re-start government spending and lift domestic
demand in a bid to keep Thailand from falling into recession
with a second straight quarterly contraction.
Based on the April data released on Wednesday - which
included a 0.9 percent fall in exports from a year earlier -
avoiding recession "remains challenging", said Tim Condon,
regional economist for ING in Singapore.
But he is hopeful the new government can get delayed state
projects on track and put "some vigour in domestic spending".
In January-March, the economy shrank 2.1 percent from the
previous quarter. Since the political crisis began in November,
Thailand's traditional growth engines have sputtered, and the
April data did not offer encouragement they can gear up quickly.
Imports fell 14.5 percent from a year earlier, according to
the Commerce Ministry, less than the 18.2 percent drop projected
in a Reuters poll. But imports remained weak - and many of
Thailand's imports go into finished goods later exported.
For April exports, the poll forecast a 0.5 percent increase.
Thailand had a trade surplus in March, but April brought a $1.45
billion deficit, more than twice the forecast.
Industrial output in April was 3.9 percent lower than a year
earlier, the Industry Ministry said. That compared with March's
revised drop of 10.5 percent and a 6.4 percent decline seen in a
The 13-month streak of annual declines in output is the
longest since Industry Ministry data become available in 2001.
While the military coup may have eased fears of an imminent
escalation in violence, it is not clear how the junta plans to
install a properly functioning government given Thailand's deep
Rating agency Fitch said last week that if a roadmap for
political stabilization is not in place within a month or two,
there could be more lasting damage to the economy, which could
be negative for Thailand's sovereign credit rating.
Though the Thai economy and its financial markets have
proved fairly resilient to past military coups, HSBC analyst
Frederic Neumann said in a column this week that "such
resilience masks a darker reality: the Thai economy is falling
behind its regional peers, its competitiveness is sputtering and
growth is increasingly driven by debt, not productivity."
Thai exports, which account for more than 60 percent of
gross domestic product, have been weak even though the political
crisis has not disrupted factories or ports.
Exports in January-April were 1 percent lower than a year
earlier, but the Commerce Ministry insisted on Wednesday that
they can still rise 5 percent for all of 2014. Like many of its
export-reliant Asian neighbours, Thailand is counting on
improved demand from the United States and Europe.
In April, factories' capacity utilisation was 56.6 percent,
the lowest since December 2011 when there was severe flooding.
TACKLING ECONOMIC PROBLEMS?
Tourism, which accounts for about 10 percent of the economy,
has taken a hit. Consumer confidence is at a 12-year low, weaker
than after the bad floods of late 2011, violent political unrest
in 2010 and a deadly tsunami in late 2004.
Growth forecasts have been cut steadily since November. But
some economists say the outlook could improve now that the
military council started paying money owed to rice farmers.
Thailand can avoid slipping into recession in the second
quarter given the junta's actions to support the economy, said
Pimonwan Mahujchariyawong, economist with Kasikorn Research
"The military council is trying to tackle economic
problems, such as the budget and rice payments to farmers, which
means there will be nearly 100 billion baht put into the economy
this quarter," Pimonwan said. "If there is nothing to interrupt
their work, the second half will be better."
The output and trade numbers released on Wednesday were the
first government data on April. Earlier, the Federation of Thai
Industries said vehicle sales in April dropped 33.2 percent from
a year earlier.
The vital auto sector has slowed since mid-2013 following
the end of a state subsidy for car purchases, when sales surged.
The unrest has added to carmarkers' problems and more than
30,000 jobs have been lost this year.
The Thai unit of Honda Motor Co said last week it has cut
production at its Ayutthaya plant to 60 percent due to weak
domestic demand, and voiced concern sales may fall short of its
target this year.
The Japanese carmaker also has decided to delay by six
months to a year the startup of a $530 million plant from its
previously planned April 2015 date.
Economists are divided on whether the Bank of Thailand will
cut rates further at its next policy meeting on June 18. At its
last meeting on April 23, the central bank kept its policy
interest rate unchanged at 2.0 percent. Some
analysts think a rate cut is possible to boost growth while
others say it would do little to help spending as confidence is
low and household debt high.
Condon of ING said he thinks the change of a rate cut is
increasing, as he expects the central bank to again cut its 2014
But Pragrom Pathomboorn of KGI Securities in Bangkok, who
earlier thought there will be a cut on June 18, now thinks there
won't be one until mid-2015. He said the end of political
disputes on the streets, declining risks and a re-start of
growth engines should boost the economy in the second half of
($1 = 32.6 Thai Baht)
(Editing by Richard Borsuk)