​The Commerce Ministry reported that exports declined 1.48 percent in July from a year earlier while imports rose 1.08 percent.

July was the second straight month for which a Reuters poll of economists had forecast an annual increase of exports, but they fell instead.

The poll had projected an 0.8 percent increase in July. For June, the poll forecast a 1.5 percent gain, but exports dropped 3.4 percent from a year earlier.

Exports are pivotal for Thailand, accounting for about 60 percent of its economy. In the first seven months of 2013, exports rose just 0.6 percent from a year earlier.

“While we still expect exports to improve, the weak July data is not a good sign for export growth this year, which could be lower than 3 percent. It will have quite an impact on economic growth,” said Pimonwan Mahujchariyawong, an economist at Kasikorn Research Center.

Thailand slipped into a mild recession in the first half of the year, as the economy shrank on a quarterly basis in each of the first two quarters.

However, the national planning agency said on Monday the economy is expected to grow in the third quarter on both a yearly and quarterly basis.

SoutheastAsia‘s second largest economy grew 2.8 percent in the second quarter year-on-year. But it shrank 0.3 percent from the January-March period, when it contracted 1.7 percent.

Slowdown Still Hurt

The Commerce Ministry blamed the July shrinkage, like previous ones this year, on weak global demand. It mentioned slowdowns in China and the United States and said the euro zone was still in recession last month.

Exports to China in July fell 5.3 percent from a year earlier, compared with June’s 16.7 percent decline.

As in June, the only market showing growth was SoutheastAsia. Thai exports to neighbours rose 8.6 percent in July, up from June’s 5.5 percent on-year gain.

The ministry said it would review its 2013 export growth forecast of 7.0-7.5 percent next month.

In July, the Bank of Thailand slashed its export growth projection to 4 percent from 7.5 percent. It also lowered its economic growth estimate to 4.2 percent from 5.1 percent.

Bernard Aw, an economist at Forecast Pte. in Singapore, said while exports remain under pressure, the Thai numbers should get better in the second half “on the back of improvement in the U.S. and Japanese economies, as well as signs of stabilisation in the eurozone.”

Aw said he expected the central bank to keep its policy rate unchanged at 2.50 percent for the rest of the year, barring a sharp deterioration in the economy.

Thammarat Kittisiripat, an economist at TMB Bank, said further policy easing was likely later this year.

“Weaker-than-expected overseas demand may pose a significant risk of another rate cut in the final quarter,” he said.

Thailand’s central bank left its benchmark interest rate unchanged this month, saying the current level remained appropriate for helping the economy regain momentum. (Reuters)