Bangkok Post
A double dip on the cards?
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An economist is concerned about Thailand's potential dual deficit scenario, in which both the fiscal balance and current account move into deficit simultaneously.
Key facts
- The warning comes as Thailand recorded a record trade deficit of US$10 billion in April, driven by a 45% year-on-year surge in imports to $41.6 billion, compared with exports of $31.5 billion
- For the first four months of the year, imports totalled $147 billion against exports of $128 billion, resulting in a cumulative trade deficit of $19.5 billion.
- An economist is concerned about Thailand's potential dual deficit scenario, in which both the fiscal balance and current account move into deficit simultaneously.
- While the government continues to rely on fiscal stimulus to support growth, weaker exports, softer tourism earnings and rising imports have raised questions about the sustainability of the country's external position.
- Meanwhile, Thailand has experienced a prolonged investment shortfall, with private investment remaining at around 20% of GDP, compared with more than 30% in Vietnam.
- If private investment rises to 25-27% of GDP and causes Thailand to run a current account deficit, that should not be a concern as it would support stronger long-term economic growth,"
Summary
While the government continues to rely on fiscal stimulus to support growth, weaker exports, softer tourism earnings and rising imports have raised questions about the sustainability of the country's external position.
A widening fiscal deficit alongside a deteriorating current account could increase financial market volatility, pressure the baht and limit policy flexibility.