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23 Jun 2008

Thai Economy

Decelerating Imports Likely, Less Exposure to Trade Deficit in 2008 (Business Brief No.2204)

  • Exports in May 2008 reached an all-time high of USD15.463 billion, rising by 21.4 percent, over-year, but down from the growth of 27.0 percent in the month before. This is close to the growth projection of 21.1 percent made by KASIKORN RESEARCH CENTER (KResearch). However, the declining exports were outpaced by imports totaling USD14.168 billion, up 15.7 percent, versus the growth of 44.4 percent in April, and substantially lower than an earlier projection of 27.1 percent. As a result, Thailand's trade balance has resumed a surplus of USD1.294 billion, compared to a deficit of USD1.807 billion in April.
  • Increased exports in May stemmed from higher farm produce and agro-industrial product exports, whereas industrial products posted weaker exports. Among the key export items that recorded marked growth were books and printed materials, up 177.5 percent (over 122.5 percent in the month before); refined oil up 137.2 percent (from 149.6 percent in the previous month); rice up 128.2 percent (over 137.6 percent in the month earlier); and, gems and jewelry rising by 104.5 percent (over 43.9 percent in the previous month). Meanwhile, slowing growth was seen in some products, e.g., computers, parts and accessories as well as cars, parts and accessories. Among the products that encountered contractions were integrated circuits, air-conditioners and parts, garments, sugar, etc.
  • The lower imports could be attributed to slower growth in fuel products, which grew only 4.7 percent, down considerably from the 88.1 percent in April. Other imports that saw slower growth included capital goods, raw materials and intermediate goods, as well as consumer goods.

KResearch takes the view that even though steep oil prices may affect the import value over the remainder of this year, a slowdown in domestic spending amid runaway oil prices and the domestic political uncertainties may result in slower import growth over the remainder of this year. Given this, the Thai economy may be less vulnerable to a trade deficit this year than projected earlier. On the export front, however, we should keep a close watch on what the impact of regional economic slowdowns plus the Vietnamese and US economic crises which may have on Thai exports over the rest of this year.

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Thai Economy