June 2016 exports continued to contract for a third consecutive month. However, there were signs of improvement, thanks to expansion in shipments of automobiles and gold. June exports totaled USD18.15 billion, declining slightly about 0.1 percent YoY. Excluding gold, however, outbound shipments contracted around 3.5 percent YoY. Another major reason for the improvement was expansion in automobile/auto parts shipments that increased 26.6 percent YoY. However, that was versus a low 2015 base, when the value shrank 19.1 percent YoY in June 2015. Therefore, auto export growth may not be as promising as this for the rest of the year.
The value of exports to the ASEAN-5 market recorded the biggest drop in the past eight months, reflecting a sluggish global economic recovery. In June, exports to this market, which represented about 13.3 percent of Thailand's total exports in the month, continued to decline 23.0 percent YoY. All major exports to this market decreased across the board, including capital goods, fuels and automobiles. Shipments of machinery and parts plunged 52.9 percent YoY, while refined petroleum products contracted 44.5 percent YoY. Outbound shipments to the CLMV—Thailand's strongest-potential export destination—declined 6.8 percent YoY in June.
During 2H16, although the latest data implies an improving picture, increasing global economic volatility may continue to add risk to Thailand's export recovery. Exports to the EU may slow because the Brexit has caused the GBP and EUR to depreciate, while the THB strengthens versus the USD, thus making Thai exports more expensive. Moreover, commodity prices are likely to remain low in line with crude oil prices. Together with China's economic slowdown and a subsiding positive impact of gold prices that have already risen considerably, we at KResearch maintain our Thailand export performance projection for 2016 at (-)2.0 percent YoY, but we will keep monitoring recovery trend of our outbound shipments in months ahead.