Published on August 22, 2007
The stronger baht, the US economic slowdown and fallout from the US sub-prime mortgage crisis combined to dampen Thailand's export performance in July.
Exports grew by only 5.89 per cent year on year to US$11.8 billion (Bt405 billion), the lowest figures in 29 months, says the Commerce Ministry.
The worse-than-expected export performance has surprised Commerce Minister Krirk-krai Jirapaet because exports showed significant growth in the first half of this year.
"It is unusual that exports show slowing growth in July, after 18.6-per-cent growth in the first half of this year. The ministry will closely monitor export figures for the remaining period to see if they are really affected by the stronger baht," he said.
In the first half of the year, Thailand's exports rose at an average pace of 18 per cent, a remarkable performance in light of the baht's 7-per-cent appreciation against the dollar. But the country's exports in baht terms fell 4.6 per cent to Bt406 billion last month, the lowest figure for five years.
However, the value of exports for the first seven months of the year still showed a jump of 16.65 per cent, to $83.4 billion. At the same time, the value of imports grew by 5.14 per cent to $77.69 billion, bringing Thailand a trade surplus of $5.71 billion.
The value of imports in July showed a slight increase of 2.4 per cent to $11.59 billion, so for the month of July alone, the trade surplus was $211 million.
The Commerce Ministry remains confident that Thailand will achieve its export target of 12.5-per-cent growth to $145 billion this year, following the robust performance in the first half, Krirk-krai said.
The export effort will also be helped by continuing positive factors, such as world economic growth, which is now expected to reach 5 per cent, a 7-per-cent increase in world trade, a more stable baht and trade fairs.
Krirk-krai said the ministry wanted to see the country's monthly export growth exceed 7 per cent for the rest of the year, to achieve the annual goal.
Two major factors that caused the drop in exports last month included the economic slowdown in the US - which also brought down the exchange value of the dollar - as well the trouble in the US sub-prime mortgage market.
Another major problem was the strength of the baht, which has decreased the competitiveness of exporters.
Exports to the US fell 13.6 per cent year on year last month. Moreover, they fell 2 per cent in the first seven months of the year.
The US is regarded as one of Thailand's most important export markets, accounting for 14 per cent of its total export value.
To compensate for lost export revenue from the US market, Krirk-krai said Thailand would concentrate on boosting exports to other markets, as well as reducing its dependence on traditional markets like the US.
"The government plans to change the proportion of new and traditional markets to 50-50 in the next few years," he said.
At present, exports to new markets account for 45.4 per cent of export value, while exports to traditional markets, including the US, Asean countries, the European Union and Japan, account for 54.6 per cent.
Exports to Singapore and Taiwan also dropped last month by 25.4 per cent and 22.3 per cent, respectively, because of the impact of the stronger baht.
Export Promotion Department director-general Rachane Potjana-suntorn said that although the ministry would attempt to increase exports to new markets, the ministry would not leave the US market.
The department will gradually promote Thai goods in the US, as well as launching international trade fairs in a variety of markets.
Exports of agricultural goods showed slowing growth last month, while exports of industrial goods continued to grow, with the exception of garments and steel.
Rice exports fell 21.6 per cent in volume and 10.9 per cent in value last month, while tapioca exports fell 35.1 per cent in volume and 10.3 per cent in value.
Exports of processed fruit and vegetables decreased 14.1 per cent in volume and 4.9 per cent in value.