Export growth to slow as US tariffs take effect

Thai exports are expected to lose their growth momentum following the imposition of a 19% US import tariff, despite robust growth of 13% in the first seven months of the year, say analysts.

Thailand's exports in July tallied US$28.6 billion, up 11% year-on-year and 0.2% month-on-month, exceeding market expectations of 9.6% growth.

The strong performance was largely driven by the manufacturing sector, particularly electronics components such as computers and integrated circuits, according to Kasikorn Securities (KS).

Excluding gold, oil-related products and arms, Thai exports expanded 16.6% year-on-year, accelerating from 15.6% in June. Year-to-date growth totalled 14.4%.

Industrial exports rose 14% year-on-year in July, buoyed by electronics components, which surged 35.2%, led by computers (61%) and integrated circuits (55%).

Electrical appliances and rubber products also contributed to growth, soaring 9.9% and 9.7% year-on-year, respectively.

Meanwhile, agricultural exports continued to support overall shipments, with strong gains in frozen fruit, processed poultry, pet food and cane sugar.

Poultry exports benefited from higher Chinese demand after Beijing restricted imports of frozen poultry from Brazil and Argentina due to avian flu outbreaks.

Conversely, rice and rubber exports contracted for the third consecutive month. Thai rice faced intense competition after India lifted its export ban in September 2024, while the Philippines suspended imports to protect domestic prices.

KS predicts the poultry industry will be a bright spot for Thai shipments, supported by rising exports to China.

Maybank Securities shared a similar view, saying export growth is projected to taper for the rest of the year as US tariffs kick in, while Washington has already announced product-specific global tariffs.

Exports of automobiles and auto parts are being scrutinised as the industry's competitiveness could be affected by US tariff differentials with those of Japan and South Korea, whose exports face 15% duties, Maybank added.

On the import side, inbound shipments were restrained by softer energy demand. July imports grew 5.1% year-on-year to $28.3 billion. Excluding oil and lubricants, imports rose 13% year-on-year, in line with strong export demand for capital goods and raw materials.

However, imports of electronic parts slowed to 10% growth, down from 22% in June, weighed down by weaker demand for integrated circuits and printed circuit boards.

In contrast, semiconductors and diodes continued to post strong growth for a fourth consecutive month.

Despite stronger export figures than forecast in July, KS cautioned that uncertainty looms as the US tariffs took effect in August.

On the investment front, KS sees positive momentum in poultry exporters' earnings, with GFPT likely to benefit the most.

China suspended imports of Argentine poultry on Aug 20 and continues to ban Brazilian chicken, leaving Thai exporters well-positioned to capture market share, noted the brokerage.

Source: Bangkok Post