Oil imports drive temporary shortfall
Thailand's current account is expected to register a deficit of around 2% of GDP in the second quarter before rebounding later in the year as global oil prices decline, according to Kiatnakin Phatra Financial Group (KKP).KKP chief economist Pipat Luengnaruemitchai noted that a current account deficit of 2% of GDP is not yet considered a cause for concern, adding that concerns would arise only if the deficit widened to 4-5% of GDP. However, he said Thailand is not expected to experience a deterioration of that magnitude.
"Following its decline to around 2% of GDP, we forecast that the deficit will gradually narrow and improve to a small deficit or roughly break even by the end of the year, in line with lower oil prices," he said.
According to Mr Pipat, although Thailand's current account is expected to remain in deficit for a short period, this is primarily due to oil imports. Excluding the impact of oil imports, Thailand's current account balance is still expected to remain in surplus, albeit at a narrower level for the period ahead.
Looking ahead, KKP expects surpluses across several components of Thailand's balance of payments to decline, particularly in the current account, trade balance and services balance, as a result of structural changes in the economy.
