BANGKOK June 26 (Reuters) - Thai exports fell more than expected in May, showing that a pillar of the economy remains weak and underscoring the tough task the military government faces kick-starting growth after seven months of political turmoil.
On May 22, the Thai army seized power in a bid to restore order and get on track a stumbling economy battered by weak demand and reduced tourist arrivals.
Exports, the bulk of which are industrial goods, were down 2.14 percent in May from a year earlier, the Commerce Ministry said. That was more than the 1 percent drop forecast in a Reuters poll. In April, shipments dropped about 0.9 percent on-year.
In May, imports fell for a 10th straight month on an annual basis, but dodged a fifth consecutive double-digit slump. They declined 9.32 percent, less than the poll's forecast of 14.0 percent.
Many of Thailand's imported materials go into assembled goods and are shipped out again, though it wasn't immediately clear if the smaller-than-forecast percentage drop was an encouraging sign for future exports.
Thailand had a trade deficit of $810 million in May, compared with the poll's forecast of a $300 million surplus.
The May drop in exports might increase concern that Thailand might have a second quarterly decline in gross domestic product in April-June - and thus enter a recession - following shrinkage of 2.1 percent in the first quarter.
The Bank of Thailand (BOT) last week forecast 0.5 percent contraction in the first half, which ING said implies zero growth in April-June. If that's correct, then Thailand could avoid recession.
The BOT cut its full-year growth forecast to 1.5 percent from 2.7 percent.
Lower commodity prices"The main factor for the export fall was lower global prices, especially rubber and sugar, which we can't control," the Commerce Ministry told a briefing.
In May, exports to China dropped 5.7 percent and those to the U.S. rose 2.8 percent from a year earlier
The ministry has forecast export growth of 3.5 percent this year, though through May, shipments are down 1.22 percent.
BOT Governor Prasarn Triratvorakul said last week exports might grow less than 4 percent this year. A revised central bank forecast will be announced on Friday.