In 1H10, Thailand's exports grew more than expected, hitting a record high in June both in value and growth rate. According to the Ministry of Commerce, June exports surged to USD18.038 billion, up 46.3 percent YoY, beating the 42.1% growth recorded in May. The previous record monthly high was in July 2008, reaching USD17.370 billion, up 45.1 percent YoY. Most of our major export categories continued to expand even higher in June. In addition, outward trade in June was supported by a 535-percent jump in gold exports, a second month's increase. Exports, excluding gold, however, grew 40.4 percent YoY, up 32.8 percent in May.
Amid bullish exports in June, imports grew at a slower rate of 37.9 percent YoY. As a result, Thailand logged a trade surplus of USD2.322 billion in June, which was slightly higher than the USD2.211 billion recorded in May.
The acceleration in Thai exports, averaging 41.5 percent in 2Q10 and 31.6 percent in 1Q10 helped lift overall exports in 1H10 to 36.6 percent growth. This prompted the Ministry of Commerce to revise upward their growth forecast on exports in 2010 to 19 percent growth, against the 14 percent growth before.
Based on the above factors, KResearch expects that the value of Thai exports in 2H10 may decelerate to an average of 17 percent YoY, down from the staggering 36.6 percent growth recorded in 1H10. In 3Q10, despite the slowdown, the export growth may remain relatively high at about 25 percent YoY, due to the low base effect amid export contraction seen during the same period of last year. Subsequently, our exports will gradually decline to single-digit growth toward the end of the year. Nevertheless, because of higher-than-expected growth in 1H10, especially between May and June, KResearch views that our outward trade for 2010 will grow at a rate nearing the upper range of our forecast of 22.0-27.0 percent.
It is expected that such impressive export performance will help lift Thailand's trade surplus to more than USD10 billion over 2010 and this will be one of the factors contributing to the Baht's appreciation, thus eroding the pricing competitiveness of Thai exports vis-à-vis those from nations that have weaker currencies, e.g., Vietnam, that has devalued their currency. Exporters are therefore urged to be prepared for this situation.
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