Thailand: Export growth remains resilient in May amid increasing global trade tensions
Thailand’s external sector rebounded from the USD 1.3 billion trade deficit registered in April to a USD 1.2 billion surplus in May, chiefly due to weaker import growth. Furthermore, the 12-month sum of the trade balance edged up from USD 10.5 billion in April to USD 10.8 billion in May.
The trade surplus in May came on the back of resilient export growth and a sizable moderation in import growth. Exports grew 11.4% in USD terms over the same month a year ago, recording the 15th consecutive month of expansion but easing from the 13.4% growth recorded in April. Foreign demand for cars, equipment and components; plastics; chemicals; and, processed oil was particularly strong in May. Exports of gems and jewelry, as well as rice, also recorded robust growth. Demand from the United States and Hong Kong was notably robust. Finally, import growth moderated significantly from the prior month’s 21.3% (previously reported: +20.4% year-on-year) to 11.7% in May.
Last year, concerns among exporters were growing over the strength of the Thai baht against the U.S. dollar. However, available trade data for the year to date signals a narrowing trade balance surplus, in part due to increasing trade tensions around the globe. Coupled with low interest rates, the narrowing surplus is putting downward pressure on the THB, which traded at 32.7 per USD on 20 June, a weakening of 3.7% year-on-year. The weakening baht could spur export growth though, as it makes Thai goods cheaper and thereby more attractive. However, the Federation of Thai Industries worries over the fallout of a potential full-scale trade war between the United States and China, which could affect Thailand’s all-important external sector.