Questions raises over sustainability of export recovery

The Commerce Ministry reported yesterday that exports had swung back to 7.68-per-cent year-on-year growth in May to US$20.93 billion (Bt667 billion), mainly from significant expansion in vehicle and auto-parts shipments as the manufacturing sector recovers strongly from last year’s floods.
Last month posted the strongest export expansion in seven months. However, exports in the first five months of the year still declined, by 1.47 per cent year on year to $92.49 billion.
Meanwhile, imports in May grew by 18.2 per cent to $22.67 billion, resulting in a trade deficit of $1.74 billion.
Imports over the first five months were worth $102.28 billion, an increase of 11.55 per cent. A large trade deficit of $9.79 billion was recorded for the period.
Paiboon Ponsuwanna, chairman of the Thai National Shippers Association, questioned whether there would be continuing export growth in future months, as the trend for imported containers had dropped last month.
“Imports of containers would normally support exports in the following months, but the import of empty containers has dropped 20 per cent year on year, implying that exports may face difficulties in the remaining months [of the year], resulting in a missed export target of 15 per cent this year,” he said.
Moreover, the impact of the financial crunch in the euro zone could be more severe than was previously thought, as the crisis has both a direct effect on overseas shipments and an indirect impact on other markets that also rely on exports to the European Union, he added.
However, Deputy Commerce Minister Poom Sarapol said export growth should hit this year’s target of 15 per cent, with $262 billion of shipments.
Exports should expand in the coming months as there are clear signs of continuing industrial recovery, while exports of farm goods, mainly rice, should growth significantly in the second half of the year, he said.
He added that the current trade deficit was not a major concern, as it was largely due to higher imports of machinery and raw materials to support industry’s post-flood recovery.
The country should be able to achieve a slight trade surplus by the end of the year after exports grow to their full potential in the second half, the minister said.
However, some challenges remain, particularly the economic slowdown in the EU, which is affecting the global economy.
To ensure the 15-per-cent export target is attained, Prime Minister Yingluck Shinawatra will lead a meeting with the Commerce Ministry, major exporters and Thai trade officials from overseas on Saturday to draw up strategies for promoting exports over the remainder of this year.
Last month, shipments of industrial goods grew 9.5 per cent, but exports of agricultural goods dropped 5 per cent.
Industrial export growth was mainly due to strong sales of vehicles, which expanded 110 per cent year on year, auto parts (54.9 per cent) and electronics (10.9 per cent).
However, shipments of garments dropped 10 per cent, while jewellery and ornament exports were down 22.3 per cent, the Commerce Ministry said.
Rice exports fell 29 per cent in terms of value and 39.8 per cent by volume, while the value of rubber exports dropped 27.5 per cent on lower demand from China and Japan.
Exports to the major markets of the United States, the EU (15 long-standing member states) and Japan grew last month by 10.9 per cent, 6.8 per cent and 5 per cent, respectively.
However, shipments to some key markets declined, including to the EU (12 new members) by 13.6 per cent, Russia and the Commonwealth of Independent States (16 per cent), Hong Kong (38.9 per cent), South Asia (2.8 per cent), Taiwan (9.6 per cent) and South Korea (6.7 per cent), the ministry said.