Thailand reported a trade deficit of US$939 million (Bt29.6 billion) last month, the biggest deficit in two years, due mainly to increasing import demand for gold and auto parts to support export expansion.
The Commerce Ministry reported yesterday that the value of Thailand's exports in July grew 20.6 per cent to $15.5 billion, while imports surged 36.1 per cent to $16.5 billion, a record for imports in two years.
Exports in the first seven months jumped 34.1 per cent to $108.63 billion while imports rose 49 per cent to $103.19 billion. Trade surplus totalled $5.43 billion in the first seven months of this year, despite a huge trade deficit last month.
The ministry reported that imports saw a big jump last month due to the lower gold price compared with June this year.
Gold imports reached 44.57 tonnes, worth $1.7 billion last month, up 203 per cent from $126.6 million in June. This was due to the lower gold price in the world market, which dropped by 3.01 per cent month on month to $1,231 per ounce in July.
Imports of vehicles and parts, including automobiles and parts, and motorcycles and parts, rose steeply last month by 77.1 per cent to $697.8 million.
"Continued export growth in July has ensured that Thai exports will achieve the expansion target of 20 per cent to Bt183 billion this year, said Commerce Minister Porntiva Nakasai.
However, the appreciation of the baht has emerged as the biggest concern, with the possibility of it slowing down export growth in the remaining period, she said.
Porntiva said the baht could even strengthen to Bt30 to the US dollar. To ensure export growth, the ministry will cooperate with the Bank of Thailand to stabilise the baht, she said.
Meanwhile, following a significant growth in exports, domestic consumption and recovery in the tourism sector, the University of the Thai Chamber of Commerce (UTCC) has revised up its economic forecast for 2010 from 56 per cent to 6.57.5 per cent.
It is expected that the Thai economy has a high possibility of achieving 6.9 per cent expansion, valued at Bt9.67 trillion this year.
Thanavath Phonvichai, director of UTCC's Economic and Business Forecasting Centre, said that robust economic growth would result in higher employment and more loan demand in the final quarter of this year, and next year.
Factors that may cause slowing down of economic growth are sluggish demand in the United States and the European Union, and the stronger baht, which is expected to touch Bt31.3Bt31.4 in the fourth quarter of this year, said Thanavath.
The new forecast took into account that incomes from tourism will grow by 6.02 per cent this year from minus 9.85 per cent, with the number of tourists reaching 14.6 million this year; exports are expected to grow by 23.9 per cent; domestic consumption will reach 3.8 per cent from a 1.1percent slide last year; and foreign direct investment will improve by 5.7 per cent from a 9percent decline last year.
GDP for the farm sector is projected to grow from minus 0.5 per cent last year to 2.1 per cent expansion this year, while GDP for the industrial sector will climb from minus 5.1 per cent to 11.5 per cent this year.
The assumption of 6.57.5 per cent growth is based on an estimated average exchange rate of Bt32 against the greenback, policy interest rate at 1.752 per cent, inflation at 3.5 per cent, and unemployment rate at 1.3 per cent.
Additionally, the UTCC also expected that the Thai economy will continue to grow by 45 per cent next year. Due to the strong economic fundamentals, the baht could move up to Bt30 to the US dollar next year.