Thailand's imports increased 6.4 per cent year on year last month, rising to a record US$11.5 billion (Bt436 billion), mainly as a result of surging imports of oil and capital goods.

This caused a trade deficit of $646.4 million (Bt27.68 billion) last month, the highest amount recorded since June 2005. On the flip side, exports jumped to $10.8 billion, an increase of 18.8 per cent on year.

Commerce permanent secretary Karun Kittisataporn said the trade deficit and high import volume and value had not exceeded the ministry's expectations.

"It is acceptable that imports have increased because it shows that enterprises are starting to increase their production capacities to boost exports in return," he said.

For instance, imports of electronics components increased 28 per cent last month, but exports rose 49 per cent in the sector.

In April, imports rose by a paltry 0.3 per cent to $9.7 billion, causing worries at the Commerce Ministry because it seemed to indicate that economic growth was slowing. However, when capital goods imports rose 1 per cent, and raw material imports increased 8.1 per cent in May, the converse seemed to be true, he said.

The country logged exports of US$49.6 billion in the first five months of the year, an increase of 16.5 per cent from the same period last year. Imports totalled $51.2 billion, a rise of 5.4 per cent.

Suvit Maesincee, vice commerce minister, predicted that the country's trade deficit should not exceed $4 billion this year and that exports would grow 17.5 per cent.

Last month, by contrast, the ministry said this year's trade deficit would not exceed $6 billion, while the Bank of Thailand predicted it would be $6.1 billion.

"We hope to see a strong improvement this year after implementing a variety of trade campaigns in many markets," said Suvit said, adding that imports should not prove problematic for the trade balance.

Imports of several key goods were behind the high import volume, including fuel, machinery and parts, electronic goods, chemical products and gold.

Oil imports in May climbed to $2.4 billion, up 2.5 per cent from the same period last year. Oil accounted for 21 per cent of the imports in May. This sum equates to 28.7 million barrels, or an average of 925,040 barrels per day.

Gold imports dramatically increased in volume last month, compared to a drop of 62 per cent in April.

Gold imports hit $350 million in May.

Rachane Potjanasuntorn, director-general of the Foreign Trade Department, said gold imports had surged in May because of the rising price in the world market. Prices have since dropped substantially.

Gold traders also increased their exports to take advantage of the rise in value.

Chantra Purnariksha, director-general of the Export Promotion Department, said exports of farmed goods, in particular shrimp, had risen sharply. Year-on-year shrimp exports rose 28 per cent in May, higher than the ministry's target growth of 15 per cent for the entire year.

Exports to the United States increased 44.2 per cent, even despite the anti-dumping duties the country levies on Thai shrimp exports.

Exports to new markets also increased last month. Sales to South Korea grew 51 per cent, while exports to Taiwan grew 46 per cent. Exports to the Middle East saw a rise of 46 per cent, while exports to South America, Eastern Europe and Indochina grew 44 per cent, 32 per cent and 24.7 per cent respectively.

Petchanet Pratruangkrai

The Nation