With US$24.3-bn exports, May sees eighth month of contraction

Commerce Ministry permanent secretary Keerati Rushchano said the decline was 1.4% if goods related to oil and gold were excluded.

Meanwhile, imports in May amounted to $26.19 billion, a decrease of 3.4% YoY, resulting in a trade deficit of $1.85 billion.

In the first five months of this year, exports reached $116.34 billion, a decline of 5.1% YoY, while imports in the period January to May amounted to $122.71 billion, down 2.5%. Thus, the trade deficit for the first five months of 2023 amounted to $6.3653 billion.

Although global industrial production has picked up following the easing of supply chain issues, new export orders have not increased significantly. This is because tight monetary policies of central banks have imposed tighter control over spending by businesses and consumers, he said.

Silver lining

However, Thailand's export contraction in May was less compared to the previous month and had a higher value than the five-month average. This was partly driven by the expansion of industrial exports in the past eight months, particularly in the electronic goods sector, such as semiconductors, electrical transformers, vehicles and components, and electrical appliances, including air-conditioners.

The main markets that contributed to this growth were the US, Asean, and the European Union. Nevertheless, Thailand's exports in the first five months showed a 5.1% decline, which is 2.1% when excluding goods related to oil, gold and military-related supplies.

However, Thai exports contracted less than the previous month and exceeded the five-year average in May, driven by an eight-month expansion in industrial products such as electronics, including semiconductors, transformers, and more, vehicles and components, and electrical appliances, such as air-conditioners, while major markets such as the US, Asean and the European Union have resumed expansion. Thai exports in the first 8 months fell by 5.1%, or by 2.1% if oil-related goods, gold and military-related supplies are excluded, ministry data showed.

Agricultural exports and agro-industrial products declined by 16.3% over a four-month period. However, some products have seen exports expand, such as refined sugar, rice, beverages, fresh chilled and frozen chicken. Products whose sales have contracted are fresh fruits, chilled and frozen fruits, palm oil products, rubber, animal feed, fats and oils from plants and animals. Agricultural and agricultural-industrial exports accounted for 1.3% of Thai exports in the first five months of this year.

Meanwhile, agro-industrial products contracted by 0.6% for two consecutive months, but key commodities continued to expand, including sugar, rice, beverages, fresh chicken, chilled and frozen. Key commodities exports contracted by 5.25% in the first five months, including fresh, chilled, frozen fruits, cassava products, rubber, pet food, fats and oils from plants and animals, ministry data showed.

Industrial exports expanded by 1.5% in the past eight months. Key products that have shown growth include automobiles, parts and components, air-conditioning equipment and components, electronic components, transistors, and diodes, boilers, motorcycles, and components. 

However, products related to computer equipment, parts and components, telecommunication devices and equipment and brass/brass-related products have contracted. Industrial exports showed a decline of 5.4% in the first five months of this year.

Moderate expansion

Exports to major markets have shown signs of moderate expansion, including the US, the European Union, and Asean. This reflects the improved economic conditions of trading partners, although many countries still face the risks of economic downturn due to high interest rates and high inflation, he said. Exports to China have contracted in line with the country's current economic slowdown.

According to Keerati, the Thai economy is still aiming for a 1-2% export growth this year. The next export trend is expected to improve, but Thai exports still face risks from factors such as the economic slowdown of trading partners, which could lead to an economic downturn, especially in the European Union market.

Fluctuating weather conditions may affect agricultural production this year. The pressure from interest rates and inflation may impact consumption and the manufacturing sector. Changes in trading policy directions of key trading partners, especially China's self-reliance policy, also pose challenges to Thai exports, Keerati said.

On the positive side, factors contributing to Thailand's exports include the proactive and in-depth policies implemented by the Commerce Ministry to maintain existing markets, explore new markets, and expand opportunities for Thai exporters, Keerati said. The trend of slowing down interest rate hikes by the US Federal Reserve may help reduce pressure on consumption and investment. Droughts occurring in several countries may also present good opportunities for Thai agricultural exports.

The Commerce Ministry has aggressive plans to promote and facilitate exports, Keerati said, citing as example accelerating the “Thai Food, Global Food” policy to meet the increasing global demand for food based on population growth.

The government supports private sector-led initiatives to boost Thai foods and fruits exports and the use of soft power marketing to promote Thai foods globally, such as the Thaifex-Anuga Asia (2023) international food exhibition held late last month in Bangkok, he said.