Thailand: Export growth inches up in July, but 12-month trade surplus continues to narrow
Thailand’s external sector recorded a trade deficit of USD 525 million in July, sharply contrasting June’s USD 1.6 billion surplus. July’s result is the third trade deficit in the first seven months of the year. The 12-month sum of the trade balance meanwhile dropped to USD 10.6 billion in July (June: USD 11.0 billion), marking the lowest reading since September 2015.
Export growth accelerated slightly to 8.3% in USD terms over the same month in 2017 (June: +8.2% year-on-year), marking the 17th consecutive month of expansion. Despite the pick-up, export growth undershot more bullish market expectations of 9.8%. Growth in exports was driven by robust foreign demand for pistons and internal combustion engines, oil, and chemicals. In addition, overseas demand for cars and computers remained robust, with both categories growing at a double-digit pace; these two categories represent roughly a fifth of total exports in USD value terms. On the other hand, import growth continued to ease in July, expanding 10.5% over the previous year (June: +10.8% yoy).
On 20 August, the government raised its growth forecast for exports this year from 8.9% to 10.0%, which is slightly above last year’s 9.8% result. On average, exports have grown by 10.8% in the first seven months of the year, which indicates the target is achievable. However, escalating trade tensions between the United States and China continues to loom over the external sector’s outlook.