Here's what lies beneath Thailand’s current account deficit

Two opposing forces have been at work.

According to J.P. Morgan's Economic Research Note, the lingering dip into deficit has been an unusual feature of Thailand’s recent current account data, with the headline balance printing in the red in five of the first seven months of the year.

Here's more:

Behind this flip from several years of sizable surpluses, two opposing forces have been at work: a collapse in the trade surplus to almost flat levels, and a notable improvement in the invisibles balance.

Sluggish external demand has been partly responsible for Thailand’s narrowing trade surplus. In large part, weak export growth reflects muted demand from China and the G-3, amid signs of structural headwinds facing the Thai electronics sector.

But while exports continue to look soft, demand for certain imports—particularly oil and gold—remains sticky, even as domestic activity has slowed through the year.

Strength in these imports has widened the oil, gas, and gold deficits considerably; the trade balance outside of these commodities has held up better.

While the persistent narrowing in the trade surplus is weighing on the current account balance, the deterioration is being offset in part by a rapid improvement in the invisibles balance.

Here, a surge in tourist arrivals is pushing the balance of trade in services into surplus for the first time in years.