Thailand Foreign Trade on the Path of Recovery
By Pisinee Leelafaungsilp - Research Analyst
Foreign trade has been playing a crucial role for Thailand’s economic development with merchandise exports and imports accounting for about 55% of domestic GDP and 47% of nominal GDP, respectively.
Thailand’s trade balance has remained on a healthy course over the past two years in spite of the lower surplus trend recently. With regards to the latest data in August 2017, the exports of goods surged 13.23% year-over-year to 21.2 billion USD, while imports rose at a higher rate of 14.93% YoY to 19.1 billion USD resulting in a trade surplus of 2.09 billion USD after the country had recorded the trade deficit of 188 million USD back in July 2017.
Reflecting back on the last two years, we found that Thailand had retained trade surplus with both negative export and import growth rates. It could be implied that the country earned net trade revenues based on decreasing foreign and domestic demands amidst baht depreciation momentum (avg. 33.85-36.71THB/USD) during 2015-2016.
This year, by contrast, has shown an opposite picture in such a way that trading transactions have improved vigorously recording double-digit growth rates for four consecutive months thanks to recovered global demand as well as rising commodity prices, especially agriculture and energy prices. Exports value totaled 153 billion USD in the first 8 months of the year, growing by 8.9% YoY and recording the highest growth rate since 2011.
Regarding trade by product types, Thailand’s exports rely on manufacturing goods and agricultural products which combined accounted for 95% of total exports. Main products in focus are rice, rubber, electronics, automotive, agro-manufacturing, machinery and equipment.
In Aug 2017, rice exports continued to expand robustly 47% YoY, compared to 99% YoY in July 2017. Rubber exports has grown steadily at 24.6% YoY after 21.5% YoY in the previous month. Likewise, electronic and machinery sales performed well with 12.8% YoY and 9.8% YoY respectively, due to improved external demand for electronics and optical appliances, particularly integrated circuits from top 3 destinations - China, USA and Japan.
On the other hand, imports value growth has accelerated faster than exports side. Raw and intermediate materials and capital goods (notably in telecommunication sector) contributed to 80% of total imports. The country massively imported crude oil with a growth rate of 78.5% YoY in Aug 2017, compared to 18.2% YoY in the previous month. Base metal imports accelerated to 21% YoY before the increase in global prices in Q3 of the year.