19% Increase in Exports Boosts Thai Economy : Two Studies Concur: Overall Outlook Good

A more diversified export mix, with manufactured goods taking over some of the load from traditional exports such as tin, agricultural products and lumber, led Thailand into the black in its 1986 current accounts for the first time in more than a decade.

Overall export growth was 19% and, according to a U.S. Embassy study, the medium-term outlook for the Thai economy is “excellent.” However, the study says, budget deficits still are a cloud over future growth.

Furthermore, according to a report of the Central Bank of Thailand, current accounts will slide into the red again in 1987 on the strength of increasing demand for imports.

Current accounts swung to a surplus of $38.5 million in 1986 from a deficit of $1.62 billion in 1985. The trade deficit declined, to $781 million, while “invisibles,” mostly tourism-related, posted an $820-million surplus.

Growth in Textiles

Manufacturing exports were led by the textile industry, which posted growth of 31% in sales abroad, and by some relatively new export earners: sports shoes, toys, artificial flowers and gems and jewelry.

Sales of non-traditional items rose by 22%, the Central Bank figures showed. In the past decade, the traditional commodities’ share of total exports has fallen from 61.5% to 33.7%.

Tight and politically unpopular fiscal and monetary policies imposed in the past two years appear to have eased the country out of a mild recession. The 1986 growth rate should be a shade under 4%, the embassy estimated, while the 1985 figure was revised downward to 3.2%. For 1987, growth of 5% is forecast, far better than in most of Thailand’s Southeast Asian neighbors. Interest rates are down, and inflation remains no more than 4%.

The 1986 picture was brightened, however, by low oil prices--possibly a one-time advantage--and the economy will have a number of weak spots in 1987 and beyond.