Thailand May exports drop most in 3 years on weak global demand, strong baht

25, Jun. 2019

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BANGKOK, NNA – Thailand’s exports contracted the most in nearly three years in May due to slowing global demand and the appreciation of the baht, which makes Thai goods more expensive overseas, data from Commerce Ministry showed on Friday.

The weaker-than-expected figure came after the ministry had trimmed down its annual export growth forecast from 8 percent to 3 percent last month.

Key points:

―― Exports slumped 5.8 percent from a year earlier to $21.02 billion in May after dipping 2.6 percent to $18.56 billion in April. It was the third consecutive month of falls. The decrease was sharper than the median economist forecast of a 3.6-percent drop in a Reuters poll. It was the biggest slump since the 6.3 percent tumble in July 2016.

―― In the first five months of the year, exports sank 2.7 percent y/y to $101.56 billion.

―― The U.S.-China trade dispute cut Thai exports by $135.1 million in May, making a negative contribution of 0.64 percentage point in the year-on-year change, the director-general of the ministry’s Trade Policy and Strategy Office, Pimchanok Vonkorpon, told reporters.

―― In contrast, shipments to the United States jumped 7.8 percent to $2.62 billion, marking a second consecutive month of y/y increases, after rising 4.7 percent in the previous month. Thailand added $126.8 million to its exports to the U.S. as a substitute for China last month.

―― Exports to China posted the seventh consecutive month of declines, shrinking 7.2 percent to $2.52 billion, after falling 5 percent in April. In the wake of higher U.S. tariffs on Chinese imports, companies in Thailand that are part of the Chinese supply chain network lost $281.5 million in export revenue last month, ministry data showed.

―― Shipments to the Association of Southeast Asian Nations declined 10.2 to $5.34 billion last month after edging up 0.9 percent in April.

―― By product, shipments of farm products shrank 1.4 percent to $3.58 billion, with rice posting a 13.3 percent drop to $359 million and sugar falling by 14.4 percent to $275 million. Exports of industrial products slid 5.8 percent to $16.63 billion, with vehicles and auto parts down 15.3 percent at $2.98 billion, while electronic products and parts decreased 6.4 percent to $3.07 billion.

―― Imports slipped 0.6 percent to $20.83 billion in May, marking the fourth straight month of declines after a 0.7 percent drop in April. It was a stronger performance than the median economist forecast of a 1.9 percent fall. In January-May, imports declined 1 percent to $100.83 billion.

―― Thailand had a trade surplus of $181.5 million in May, rebounding from a deficit of $1.45 billion in April.

Takeaway:

―― The Ministry of Commerce revised down its annual export growth forecast from 8 percent to 3 percent last month on weak global demand due to the U.S.-China trade dispute. Economists at Kasikorn Research Center also trimmed their own export growth estimate from 3.2 percent to zero.

―― The director-general of the ministry’s Department of International Trade Promotion, Banjongjitt Angsusingh, told reporters that the appreciation of the baht should ease later this year.

―― The government is trying to mitigate the impact of the U.S.-China trade dispute by engaging in free-trade negotiations and seeking new export markets in Africa, she said.