Thai May export growth beats forecast with fastest pace in more than 3 years

Thailand's exports surged 18.4% year-over-year in May, exceeding expectations and marking the fastest growth in over three years, driven by a 35% jump in shipments to the United States ahead of a tariff moratorium expiry in July. Commerce Minister Pichai Naripthaphan anticipates exports will continue to perform strongly, projecting over 10% growth for the year, supported by a weaker baht and ongoing trade negotiations with the U.S. Imports also rose 18%, resulting in a trade surplus of $1.12 billion for the month.

Analysis

Thailand's export sector demonstrated robust performance in May, with shipments surging 18.4% year-over-year to a record $31 billion, significantly outpacing the Reuters poll forecast of a 6.7% increase and marking the fastest annual growth in over three years. This strong outturn was largely attributed to a 35% year-over-year jump in exports to the United States, its largest market, as businesses accelerated shipments ahead of a U.S. tariff moratorium set to expire in early July. For the first five months of 2025, exports grew by 14.9% year-over-year. The Commerce Minister, Pichai Naripthaphan, expressed optimism, projecting export growth to exceed 10% for the full year, bolstered by a weaker baht and ongoing trade negotiations with the U.S. regarding tariffs; he hopes for a favorable outcome, potentially maintaining tariffs as low as 10% compared to a possible 36% reversion. Other key export destinations also showed strength, with shipments to China increasing by 28%. Sector-wise, computer and parts exports saw a remarkable 104% surge, and agricultural goods rose 6.8%, though rice export volumes slightly declined by 0.2%. Concurrently, May imports rose 18% year-over-year, contributing to a trade surplus of $1.12 billion for the month, underscoring a positive momentum for Thailand's trade balance, a key driver for its economy.

Key Decisions for Investors

• Investors should closely monitor the outcome of U.S.-Thailand trade negotiations expected by July, as the resolution on tariffs will be a critical determinant for the sustainability of Thailand's export growth and impact related equities.
• The strong export figures and optimistic government outlook, supported by a weaker baht, present a potentially favorable environment for investments in Thailand; however, this should be balanced against the significant event risk posed by the upcoming U.S. tariff decision.
• Consider potential opportunities in high-performing export sectors, such as electronics (computers and parts), but be aware that their continued outperformance is heavily contingent on maintaining favorable international trade terms, particularly with the U.S.