Thailand: Exports beat market expectations and regain momentum in May
June 22, 2017
Thailand’s trade balance recorded a USD 0.9 billion surplus in May, which is significantly above the previous month’s USD 0.1 billion surplus. May’s surplus was, however, below the USD 1.7 billion surplus observed in the same month last year and market expectations of a USD 1.2 billion surplus. The 12-month sum of the trade balance came in at a USD 15.6 billion surplus in May, below April’s revised USD 16.3 billion surplus (previously reported: USD 15.9 billion) and marking the fourth consecutive monthly decline.
Exports grew 12.7% on an annual basis in May, benefitting in part from a low base effect. May’s print came in above the revised 8.0% increase witnessed in April (previously reported: +8.5%) and marked the highest annual pace of expansion since January 2013, easily beating market analysts’ expectations of a 6.3% increase. The print was supported by the global recovery and a pickup in demand for electronics and overall vehicles and parts. Imports also picked up pace and grew 18.4% in May, compared to the previous month’s 13.4% expansion and beating analysts’ expectations.
The strong performance of exports in May suggests that the trade-dependent economy is gaining momentum, which makes the government’s aim of reaching 5% export growth in 2017 look plausible, despite external downside risks. However, although the baht has been one of Southeast Asia’s star-performers this year against the US dollar, alongside the Malaysian ringgit, the strength of the Thai currency could harm the external sector’s competitiveness. “The ministry [of commerce] is confident of achieving its 2017 export growth target of 5 percent and sees a strong baht as a short-term factor”, Pimchanok Vonkhorporn, spokesman of the Ministry of Commerce, said. Moreover, as the baht is moving in line with regional peers, the strength of the currency does not negatively affect the external sector’s competitiveness, according to Finance Minister Apisak Tantivorawong.
Author: Jan Lammersen, Economist