InfoQuest (February 24, 2020) -- The Trade Policy and Strategy Office (TPSO) of the Ministry of Commerce (MOC) released Thailand's international trade data for January 2020. Over the month, Thailand's export volume was 19.6257 billion U.S. dollars, up 3.35 percent, which is the first positive growth in recent six months. The market is expected to shrink by 2.9 percent to 3.1 percent. Thailand's import volume was 21.1814 billion U.S. dollars, down 7.86 percent with a trade deficit of 1.5557 billion U.S. dollars.
Ms. Pimchanok Wonpornporn, director of TPSO, disclosed that Thai exports have seen the first positive growth for six months in this January by posting an increase of 3.35 percent, but contracted by 0.6 percent excluding gold and oil.
There are many driving forces behind this positive growth. First, gold exports have enjoyed a sharp increase of 299.6 percent amid climbing market prices worldwide. This comes as a result of people's craze for gold as a safe haven asset as public concerns about the COVID-19 epidemic and the U.S.'s economy that hit its lowest in three years in 2019 spread.
Second, oil exports have now returned to normal after refineries closed at the end of 2019.
Third, major agricultural products resumed growth and a number of processed agricultural products and industrial products continued to grow.
Fourth, Thailand's exports to key markets maintained good momentum, and to some markets resumed growth.
Fifth, production chains which are adjusted due to the trade war is moving on a better track.
Sixth, faced with a number of challenges, diversified Thai products and fragmented Thai export markets have boosted Thai exports.
Ms. Pimchanok said that Thailand's exports in January were little hit by the outbreak of the COVID-19 virus, so it is expected that once this epidemic gets under control, Thailand's exports of many Thai products are expected to grow significantly. It's all the more so when it comes to agricultural and food products as Thailand's strong production capacity in this field can meet the needs of many countries in the region.
"Thailand products are able to satisfy regional needs. We have many in-demand products, such as food. We believe that they will become new star products because many countries are still concerned about their food security," said the director of TPSO.
Moreover, Ms. Pimchanok also talked about Thailand's export trends in 2020, noting a series of negative factors. Both the global economy and the Thai exports will be under pressure from the COVID-19 virus epidemic, resulting in the slowing recovery of the global economy and trade in the short to medium term. Geopolitical risks and low oil prices are also among these factors. Fortunately, the Chinese government has taken rapid action. At the moment, the number of people infected with COVID-19 virus in China is on decline, so it is expected that the situation will be brought under control soon, and China may introduce economic stimulus measures later.
With regards to exchange rate, the Thai baht has been depreciating since the beginning of the year. This will help ease the pressure on Thai products that face relatively fierce price competition. Against the backdrop, it is necessary for exporters to purchase exchange risk insurance to avoid adverse factors in the case of severe exchange rate fluctuations.
Ms. Pimchanok said that preliminary estimates are that Thailand's exports will grow slightly by 0-2 percent this year as it will take a turn for the better in the second half. Therefore, she is very confident in Thailand's economic fundamentals. This year's official export target still has to wait for the conclusion of the Business Counselors' Meeting to be held on this Friday (February 28). This meeting will assess the overall export outlook and analyze both positive and negative factors facing Thailand's exports this year.
"We expect exports will increase slightly this year by 0-2 percent. To achieve a growth rate of 2 percent, the monthly export volume must reach about 21 billion U.S. dollars. This is possible, but entails hard work," said Ms. Pimchanok.
As multiple challenges are out there in market, the diversified products covering raw materials, intermediate products and final products, and the fragmented markets compared with countries with heavy dependence on some certain products or with a limited size in Thailand will act as a driving force for Thailand's exports in this period. Many countries now attach great importance to health and security, so it is a good opportunity to expand the food export market, because Thai food enjoys a worldwide reputation and meets international standards.
In addition, opening up online markets is another option to facilitate trade that keeps up with modern lifestyles, especially at a time when consumers are concerned and cautious about going to public places.
TPSO also disclosed detailed import information for January 2020. This month, Thai imports fell by 7.86 percent, mainly due to the higher base caused by importing weapons for military training and the decline in gold imports in 2018. Excluding gold, oil and weapon, Thai imports in this period contracted only slightly by 0.17 percent. Imports of capital goods increased by 5.8 percent, of which machinery and parts imports grew by 18.7 percent, the highest level in two years.
In terms of market, Thai exports to many important markets resumed growth by 3.1 percent. Specifically, Thai exports to the United States increased by 9.9 percent, the European Union (15) 0.6 percent, the highly potential markets 0.6 percent, the Chinese market 5.2 percent and the ASEAN market (5) 3.8 percent. All indicate that Thai exports have resumed positive growth.
While Thai exports to South Asia and CLMV markets decreased by 4.6 percent and 0.7 percent, secondary potential markets 6.6 percent, and Australia, Africa, Latin America, Russia and CIS countries 16.0 percent, 14.2 percent, 4.1 percent and 0.9 percent respectively. But its exports to the Middle East continued to grow by 2.0 percent.
Source: InfoQuest, by Kasamarporn Kittisamphan / Rachada / Sasithorn, translated by Xinhua Silk Road
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