Thailand: Merchandise exports fall at steeper rate in June
Merchandise exports dived 23.2% over the same month last year in June (May: -22.5% year-on-year). June’s outturn marked the largest fall since July 2009 and was spearhead by both tumbling agricultural and jewelry exports, and a significant base effect. Meanwhile, merchandise imports slid 18.0% over the same month last year in June (May: -34.4% yoy).
As a result, the merchandise trade balance deteriorated, recording a USD 1.6 billion surplus in June having clocked a USD 2.7 billion surfeit in May (June 2019: USD 3.3 billion surplus). Lastly, the trend pointed down, with the 12-month trailing merchandise trade balance recording a USD 16.2 billion surplus in June, compared to USD 17.9 billion surplus in May.
The ongoing pandemic will weigh heavily on the overall economy this year, as fragile external demand weighs on exports, and diminished domestic activity and supply-chain disruptions impair imports. The prolonged nature of the outbreak, a slowing of the Chinese economy and uncertainty regarding future demand for Thai products all tilt risks to the downside.
Commenting on this month’s reading, Prakash Sakpal, senior economist at ING, commented:
“Recovery is nowhere in sight just yet given that worsening Covid-19 situation globally foreshadows a prolonged weak export demand ahead. Adding to the length of recovery is drought across the country that’s hurting the agriculture production and exports. Earlier this week the Thai Rice Exporters Association cut its export target by 13% to 6.5 million tons, the lowest annual volume in two decades that could displace Thailand from its position as the world second-biggest rice exporter.”