September 20, 2019 / 9:30 AM / a month ago

UPDATE 1-Thai August exports slump as strong baht adds to trade war woes

* Aug exports fall 4% y/y, even with gold boost

* Rice exports plunge 45% y/y, deepest fall since mid-2012

* Strong baht hurt farm shipments - official

* Baht is Asia’s top performing currency this year (Adds detail, comments)

By Orathai Sriring and Satawasin Staporncharnchai

BANGKOK, Sept 20 (Reuters) - Thailand’s exports plunged in August, as the strength of the baht hit its key commodity shipments, adding to the woes caused by escalating global trade tensions.

Exports, a key driver of Thai growth, fell 4% in August from a year earlier, worse than a forecast 2% fall, despite a 378% surge in gold exports. Excluding volatile gold, exports would have slumped 9.8%.

In July, annual exports unexpectedly rose 4.28%, distorted by unusually high gold shipments.

Officials and exporters blamed the fall on the baht, Asia’s best performing currency this year, which hit its highest levels in over six years against the dollar.

“The baht makes our products more expensive than others’,” commerce ministry official Pimchanok Vonkorporn told reporters. Rice exports were a particular concern, he said.

Thailand, the world’s second biggest rice exporter, saw rice exports slumping 45% in August from a year earlier, the biggest contraction since mid-2012. Shipments of tapioca slipped 25% and rubber dropped 7.2% last month.

The strong baht has been a major challenge for Thailand’s export-reliant economy, which grew just 2.3%, the weakest annual pace in nearly five years, in the second quarter.

The government has repeatedly expressed its concern about the baht’s strength.

The currency has appreciated 6.8% against the dollar this year, sustained by Thailand’s hefty current account surplus, which the state planning agency predicts at 5.9% of gross domestic product this year.

In trade weighted terms, Thailand’s nominal effective exchange rate was the highest since 1997.

“The baht is quite a big worry for us,” said Supant Mongkolsuthree, head of the Federation of Thai Industries.

The government has urged firms to exploit the strong baht by importing machines and capital goods for investment.

But imports in August fell 14.6% from a year earlier, with electrical machines down 17.6% and raw materials down 28%. Thailand had a trade surplus of $2.05 billion last month.

In August, annual exports of cars and car parts fell 12.6%, while electronics dropped 10.5%, also hit by the trade tensions.

Exports to China, Thailand’s biggest market, fell 2.7% in August year-on-year, while those to the United States rose 5.8%.

Pimchanok said it would be difficult to achieve the ministry’s export growth target of 3%.

In the January-August period, exports dropped 2.19% from a year earlier while imports declined 3.61%. ($1 = 30.46 baht)

Additional reporting by Kitiphong Thaichareon Editing by Nick Tattersall

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