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21 Aug 2008

Thai Economy

July 08 Exports…Hitting Record-High amid Higher Commodity Shipments (Business Brief No.2262)

On August 21, the Ministry of Commerce reported international trade data for August 2008 with the key points summarized below:
- Thailand's exports in July 2008 posted higher-than-expected 43.9 percent growth, y-o-y (up 27.4 percent in June) to reach a record high at USD16.957 billion. Meanwhile, imports expanded at an accelerating pace of 55.1 percent (over the 30.7 percent growth in June) to total USD17.984 billion, outshining exports. As a result, Thailand posted a trade deficit of USD1.026 billion, against the surplus of USD627.84 million in the month before. This is the fourth monthly deficit of this year.
- Key export items that posted tremendous growth in July were refined oil products (up 278.9 percent in July against 146.8 percent in June), crude oil (up 126.5 percent in July against 93.2 percent in June), gems and jewelry (up 197.1 percent in July vs. 157.0 percent in June) due largely to shipments of pre-formed gold that expanded more than 1,000 percent), plus rice (rising by 212.1 percent in July vs. 201.9 percent in June).
- Excluding the above items, however, Thailand's exports grew 29.6 percent. Among the major export items that recorded higher growth than the month before were computers, accessories and parts thereof (up 16.5 percent in July versus the 13.3 percent in June), cars, accessories and parts thereof (rising 45.3 percent in July versus the 4.5 percent in June) and rubber (up 59.1 percent in July vs. 26.2 percent in June).
- Imports that grew considerably in July included crude oil (up 94.5 percent vs. 72.8 percent in June), iron, steel and products (up 121.2 percent vs. 80.6 percent in June), fertilizer, pesticides and herbicides (up 272.7 percent vs.112.7 percent previously), natural gas (up 87,371 percent due to increased imports of LPG to meet surging domestic demand), plus ships and floating structures (up 4,431 percent in July due mainly to imports of oil or natural gas platforms).
However, it is of note that the surges in exports and imports in July stemmed partly from substantial increases in commodity prices, especially global crude oil prices that rose more than 70 percent, over-year, on average. Meanwhile, commodity prices that started to ease in August may result in slowing exports and imports in the months ahead. Economic slowdowns in major economies that are poised to become more severe than what was seen in the first half of this year may affect demand in Thailand's key trade partner countries. However, KResearch forecasts that the better-than-expected growth in exports in the previous months may help Thailand's overall exports for 2008 to grow in a range of 17-20 percent, while imports may record growth between 26-30 percent, and the trade balance end at up to USD3.0 billion.

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