Oil prices cited as eight-month export value drops 4.92%

In August, exports fell for the eighth consecutive month, contracting by 6.69 per cent from the same month last year to $17.66 billion. If oil and gold exports were excluded, the August decline would be 6.8 per cent.

Foreseeing stronger growth of the industrial sector in the remaining months, the ministry has maintained its export-growth target for this year at minus-3 per cent, despite the Bank of Thailand projecting that overall exports this year will contract by 5 per cent.

“The ministry will maintain a working target of 3-per-cent contraction so that trade officials and exporters will have [an incentive] to drive shipments in the remaining months. Exports in the final four months should gradually recover, especially for the industrial sector, as there were good signs of machinery and capital-goods imports in August to support long-term export growth,” said Somkiat Triratpan, inspector-general of the Commerce Ministry and director of its Policies and Trade Strategies Bureau.

Imports last month were valued at $16.94 billion, down by 4.77 per cent year on year. Import value in the first eight months dropped by 4.92 per cent to $142.74 billion. 

The ministry attributed the sharp fall in import value mainly to low oil prices compared with the same period last year, as the value of oil imports declined by 44 per cent year on year last month. However, import of capital goods increased by 13.6 per cent, and import of automobile parts, supporting the growth of the automobile industry, was up by 47 per cent. 

Somkiat foresees that exports in the remaining months will not decline much as there are positive signs for industrial-goods exports, mainly vehicles and parts, electronic circuits, jewellery and ornaments, and machinery and parts.

Industrial exports declined by 3.2 per cent year on year last month, while those in the agricultural and agro-industrial sector were down by 8 per cent.

Shipments to some destinations declined again, mainly to the United States (1.9 per cent), Japan (6.7 per cent), the European Union (2.3 per cent) and Asean (14.9 per cent). However, exports to China recovered last month to 0.4-per-cent growth, and those to the CLMV (Cambodia, Laos, Myanmar and Vietnam) markets rose by 5.5 per cent.

Moreover, the ministry reported that in the first half of this year, service-industry exports rose by 18.4 per cent to $30.39 billion, while imports declined by 3 per cent to $25.75 billion.

Vallop Vitanakorn, vice chairman of the Thai National Shippers Council, said the export contraction of 6.69 per cent in August was much more than expected.

“I did not think it would be this bad. We expected the contraction to be in the same range as in July with a contraction of around 3.6 per cent, but this is almost double what we thought,” he said.

“If the situation does not change, then I am afraid the export contraction in September could reach 10 per cent from the higher base last year. From where we are now we are looking at least 5-per-cent export contraction this year.” 

Kasikorn Research Centre said the overall performance of the export sector this year could be the worst in six years after eight consecutive months of export contraction. The contraction of 6.69 per cent so far is much higher than the 3 per cent the market had expected. 

Shipments of automobiles, the top export product from Thailand, have grown for two months in a row, thanks to the expansion in passenger cars. However, shipments of pickup trucks are still contracting. 

Meanwhile low oil prices will continue to hamper the expansion of the export sector with no clear sign of recovery at the moment. 

KResearch now estimates the export sector could contract by more than 4 per cent this year from the slowdowns in China, Europe and the overall Asian economies and the continuation in low oil and commodities prices. This would mean that Thailand’s export contraction this year could be the worst in six years.