Thailand's trade deficit in April hits record high in 35 years

The latest data released by the Thai Ministry of Commerce this week shows that Thailand's trade deficit reached $10 billion in April this year, the highest record since 1991. Specific data shows that Thailand's exports in April increased by 23.1% year-on-year, slightly higher than the median forecast in the previous period; But Thailand's import volume surged by 45% year-on-year in the same month, far higher than the median forecast in the previous period. Bloomberg reported that as of last month, Thailand has experienced a trade deficit for seven consecutive months, and the $10 billion deficit in April far exceeded the median forecast of $5.3 billion. From January to April this year, Thailand's total trade deficit was 29.2 billion US dollars.

Bloomberg analysis states that the increase in Thailand's imports of production materials and raw materials, coupled with soaring oil and gas prices, was the key factor causing Thailand's trade deficit in April to reach a record high in 35 years. The Director of Thailand's Trade Policy and Strategy Office, Nanthapong, stated that with high energy prices and the continued prosperity of the artificial intelligence industry driving trade flows, Thailand's import scale may continue to remain strong in the future, which also means that Thailand's trade deficit may further expand. He also predicted that the size of the trade deficit in the coming months may fluctuate with energy prices and AI related trade trends, and the high trade deficit will put pressure on the Thai baht exchange rate. The research center under Thai Bank believes that the current import scale of Thailand is close to twice that of exports, which may lead to Thailand's international trade turning from a surplus to a deficit this year.

Last week, the National Economic and Social Development Council (NESDC) of Thailand released data showing that the Thai economy grew by 2.8% year-on-year in the first quarter of this year, slightly higher than Bloomberg's previous forecast of 2.4%, and 0.3 percentage points higher than the growth rate in the fourth quarter of last year. Bloomberg analysis shows that the Thai economy's accelerated growth in the first quarter of this year was somewhat unexpected, with government spending, private investment, and exports playing important roles. Thai Finance Minister Anidi made a cautious interpretation of the first quarter data. He stated that Thailand's first quarter economic growth data has not yet reflected the impact of the energy crisis that erupted in March. It is expected that energy prices will remain high for at least the next 1-2 years, and rising inflation and declining purchasing power of residents may put pressure on the economy in the coming months. Thailand needs to prepare in advance to cope.

NESDC stated that the situation in the Middle East is the main risk facing both the global economy and the Thai economy this year. The Middle East conflict has pushed up the cost of living for Thai residents, exacerbated domestic inflation, and impacted Thailand's exports and tourism industry. NESDC has lowered the estimated number of overseas tourists entering Thailand this year from 35 million to 32 million, which means that Thailand may experience a decline in the number of inbound tourists for the second consecutive year. The Office of Trade Policy and Strategy of Thailand stated this week that in the short term, Thailand's exports may continue to be dragged down by the uncertain situation in the Strait of Hormuz; In addition, the increase in sea freight rates and the drought caused by El Ni ñ o will also pose challenges to Thailand's exports, leading to reduced agricultural production.