The value of Thai exports dropped for a 10th consecutive month in July, and by more than forecast, mainly because global commodity prices have fallen back from the highs reached last year in the first few months of the Russia-Ukraine war.
Weak global demand has been exacerbated by high interest rates and tougher lending practices, resulting in a deceleration of consumer spending, said Keerati Rushchano, permanent secretary of the Ministry of Commerce.
He made the comment on Friday after figures showed that the value of customs-based exports contracted 6.2% in July from a year earlier, compared with an expected average of 0.75% in a Reuters poll. Exports slumped 10.8% from June.
Export value in July was $22.14 billion versus $23.6 billion in the same month last year. Imports contracted by 11.1% to $24.1 billion, resulting in a trade deficit of $1.97 billion.
Mr Keerati said the ministry has not yet adjusted its growth target of 1-2%, as it is considered a working target.
Exports in the first seven months of the year contracted 5.5%.
China, a major player in the global economy, is dealing with a sluggish recovery characterised by reduced domestic consumption, stemming from a decline in business confidence, Mr Keerati said.
Exports of agricultural and agro-industrial products contracted by 9.6% year-on-year in July to $3.98 billion, while industrial product exports dropped 3.4% to $17.4 billion.
For the first seven months, exports dropped by 5.5% to $163 billion, while imports decreased by 4.7% to $172 billion, resulting in a trade deficit of $8.28 billion.
Mr Keerati said the export performance in July could also be attributed to a high base in July last year, when exports were worth $23.6 billion.
He said the July figures should be considered relatively high compared with other countries as there are several international headwinds, including the global economic slowdown, a slow Chinese recovery and geopolitical conflicts.
Regarding the export outlook for the remainder of this year, Mr Keerati said the ministry expects a gradual recovery in the coming months despite economic slowdowns in key trading partners, reduced production and consumption, geopolitical challenges that affect production costs and currency fluctuations.
The resurgence of trading partners’ services sectors and the rise in trade tensions between the US and China have led partners to increasingly import certain electronic products from Thailand as a substitute for the Chinese market, he said.
According to Mr Keerati, the exports of essential food products are also expected to continue a steady expansion. Several countries have increased imports to ensure food security.
More efficient transport facilitated by the new Thailand-Laos-China railway is likely to contribute to enhanced export opportunities in the latter half of 2023, he added.
Chaichan Chareonsuk, chairman of the Thai National Shippers’ Council, said he believes exports during the fourth quarter have a high chance of rebounding into positive territory.
He pointed to positive factors such as the alleviation of the chip shortage in car production and the improved management of export operations at Laem Chabang Port, which led a significant increase in car exports in July.
According to Mr Chaichan, export products with potential for expansion in the later part of the year include automobiles and components, rice and sugar.