Thailand: Merchandise exports contract at softer rate in August
September 24, 2020
Merchandise exports shrank 7.9% year-on-year in August (July: -11.4% year-on-year). The reading marked the softest decline in four months and was driven by an uptick in jewelry exports and a milder decline in vehicle deliveries. Meanwhile, merchandise imports plunged 19.7% over the same month last year in August (July: -26.4% yoy).
As a result, merchandise trade balance improved, recording a USD 4.3 billion surplus in August (July: USD 3.3 billion surplus). Lastly, the trend pointed up, with the 12-month trailing merchandise trade balance recording a USD 21.5 billion surplus in August, compared to USD 19.4 billion surplus in July.
Persistently high infection rates around the world will continued to drag on the overall economy this year. As a consequence, weak external demand will weigh on exports, while diminished domestic activity and supply-chain disruptions will hamper imports. A weakening of the Chinese economy and uncertainty regarding future demand for Thai products both tilt risks to the downside.
Regarding the outlook, Sian Fenner, lead economist at Oxford Economics, commented:
“With external demand for automobiles likely to stay weak for some time, we expect the recovery in Thailand’s exports to lag most in the region. Adding to this, the ongoing travel restrictions will mean services exports will continue to be a drag on the forecast recovery.”
Author: Stephen Vogado, Economist