Thai exports suffer 10th month of decline amid global economic challenges
In July, Thai exports decreased more than anticipated for the 10th successive month. The drop is primarily due to a decline in global commodity prices since their peak in the early months of the Russia-Ukraine conflict last year.
High interest rates and stringent lending conditions, compounded by weak global demand, have led to a slowdown in consumer spending, explained Keerati Rushchano, the Permanent Secretary of the Ministry of Commerce.
According to recent data, in July, custom-based Thai exports saw a 6.2% reduction from the previous year, compared to an expected average drop of 0.75% as per the Reuters poll.
Compared to June, exports declined by 10.8%. The export value in July stood at US$22.14 billion, down from US$23.6 billion the previous year. Concurrently, imports shrank by 11.1% to US$24.1 billion, leading to a trade deficit of US$1.97 billion.
The Ministry of Commerce’s growth target remains unaltered at 1-2%, according to Keerati, who considers it a working target. The first seven months of the year saw a contraction of 5.5% in Thai exports.
Keerati highlighted that China, a significant global economy contributor, is grappling with a sluggish recovery marked by dampened domestic consumption, a result of declining business confidence.
In July, agricultural and agro-industrial product exports shrunk by 9.6% year-on-year to US$3.98 billion, whereas industrial product exports decreased by 3.4% to US$17.4 billion.
Over the first seven months, exports fell by 5.5% to US$163 billion and imports by 4.7% to US$172 billion, leading to a trade deficit of US$8.28 billion.
Keerati pointed out that the July export performance can also be attributed to a high base in the same month last year when exports were worth US$23.6 billion. He added that, compared to other countries, the July figures should be considered relatively high given several international headwinds, like the global economic slowdown, slow Chinese recovery, and geopolitical conflicts.
Looking at the Thai export outlook for the rest of the year, Keerati expects a gradual recovery in the coming months, despite economic slowdowns in key trading partners, decreased production and consumption, geopolitical challenges impacting production costs, and currency fluctuations.
He noted the resurgence of trading partners’ service sectors and the escalating trade tension betweeen the US and China have led partners to increase imports of certain electronic products from Thailand as an alternative to the Chinese market.
Continuous steady growth is anticipated in the export of essential food products, as several countries have increased imports to ensure food security, added Rushchano. The new Thailand-Laos-China railway, offering more efficient transport, is expected to boost export opportunities in the latter half of 2023.
Chaichan Chareonsuk, Chairman of the Thai National Shippers’ Council, is optimistic about exports rebounding into positive territory during the fourth quarter. He cited positive factors such as the easing of the chip shortage in car production and improved export operations management at Laem Chabang Port, which led to a significant increase in car exports in July.
According to Chaichan, export products with potential for expansion in the later part of the year include automobiles and components, rice, and sugar, reports Bangkok Post.
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