Thailand's trade report for January 2025 reveals impressive growth figures amid growing trade tensions. The country experienced export growth of 13.6% year-on-year, with the export value reaching $25.28 billion, signaling continued demand from key trading partners. This marks the seventh consecutive month of rising exports, driven by solid performances across various sectors.
According to the Ministry of Commerce, imports totaled $27.15 billion, resulting in the nation recording its highest trade deficit over the past 11 months, amounting to $1.88 billion. Economists note the gravity of Thailand's growing trade deficit, particularly with China, which poses long-term risks should trade conflicts escalate. Despite surplus trade balances with the United States, the deficit with China remains substantial, raising concerns over the sustainability of Thailand's trade figures.
The Director of the Trade Policy and Strategy Office, Poonpong Nainapakorn, highlighted these concerns during the ministry's announcement on February 25, stating, "Despite having trade surpluses with the United States, the trade deficit with China is alarming and could worsen if tensions continue, especially if China floods the Thai market with cheaper goods.”
This year’s export success has been aided by increased demand driven by economic growth within Thailand's major trade partners, accelerated import activity due to fears of retaliatory US tariffs, and continuous demand for electrical appliances and electronic goods globally.
Data from the Ministry of Commerce indicates substantial growth among certain sectors, with precious stones and jewelry, machinery, and rubber products contributing significantly to the export surge. For example, precious stones and jewelry exports saw remarkable growth of 148.8%, valued at $1.73 billion, and machinery components rose by 28.1%, standing at $903.1 million. The overall industrial goods category exhibited 17.0% growth, totaling over $20.69 billion.
Notably, agricultural exports suffered setbacks, particularly for rice, which recorded its first decline over the past seven months, falling 32.4% due to increased global supplies and higher pricing compared to neighboring countries. Thailand is now concerned about losing its competitive edge in rice production, which remains less efficient than peers.
Poonpong stated, "Thailand is the second-largest rice exporter globally, yet our production per rai is lower than other countries, impacting our price competitiveness. We must strategically plan to boost local agricultural production to maintain our market position.”
Looking forward, Thailand's ministry is cautiously optimistic, forecasting overall export growth of 2-3% for the year, with several factors playing pivotal roles. These include anticipated global economic recovery, higher demand for agricultural products, and possible increases in exports to the US as companies seek to replace Chinese imports.
Major trading partners contributing to January's growth included the United States, which saw imports jump by 22.4%, and Africa, at 13.9%. Conversely, the decline was most pronounced in agricultural goods like rice and tapioca, which decreased due to unfavorable market conditions.
KResearch, the research arm of Kasikorn Bank, anticipates steady import growth driven by materials and machinery required for local production, emphasizing the need for Thailand to refine its support frameworks for local industries.
“It’s imperative to balance our trade dynamics and fortify the domestic market by enhancing local content and production output,” warned Dr. Amorntep Chawalit, Vice President of CIMB Thai Bank’s research department, during discussions on potential trade strategies.
Trade analysts suggest focusing on balancing imports and exports with more emphasis on the local manufacturing of goods, considering Thailand's heavy reliance on imports, particularly capital and raw materials, which constitute approximately 66% of the country’s overall imports.
Statistics show significant risks on the horizon, including the threat of renewed inflation and trade tensions, which could distort market conditions. The trade deficit against China reached alarming levels, sitting at $5.69 billion for January alone, and economic experts urge immediate action to address these disparities.
Such conditions underline the necessity for strategic adjustments to Thailand's trade policy framework, preserving export growth paths without neglecting fundamental domestic needs and market stability.
For now, Thailand is primed for export performance over the next quarter, contingent on maintaining momentum with monthly exports averaging between $25 to $26 billion, aligning with forecasts for achieving the targeted growth rate.
“If we can consistently uphold these export figures, the ambitions for 2025 are achievable and sustainable,” concluded Poonpong, highlighting the year’s potential for Thailand underpinned by strategic interventions.