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May exports fall 22.5% y/y, but gold shipments surge

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People try to sell their gold at a goldsmith as demand for cash increases after the partial shutdown caused by the outbreak of the coronavirus disease hurts the local economy in Bangkok, April 16, 2020. (Reuters file photo)
People try to sell their gold at a goldsmith as demand for cash increases after the partial shutdown caused by the outbreak of the coronavirus disease hurts the local economy in Bangkok, April 16, 2020. (Reuters file photo)

Thailand’s exports in May dropped by a bigger-than-expected 22.5% from a year earlier, the weakest pace in more than 10 years, due to the impact of the coronavirus pandemic, the commerce ministry said on Wednesday.

The tumble compared with a Reuters poll forecast for a fall of 6.4% in exports, a major driver of growth, and came after April’s surprise 2.12% increase. 

“Exports may not fall much further, but could take a long time to recover,” ministry official Pimchanok Vonkorpon told a briefing, adding shipments could fall 5% this year. 

In January-May, exports declined 3.71% year-on-year. 

The strength in the baht, which was near a five-month high against the US dollar on Wednesday, was also a risk that had not been reflected in May’s export data, she said. However, gold shipments jumped 735% in May from a year earlier. Excluding gold, exports declined 27.8% year-on-year. 

The trend is likely to continue with benchmark gold prices near the highest in more than seven years on Wednesday. Many people in the country are heavily invested in gold and will sell whenever prices go up, with the metal then exported. 

The Bank of Thailand (BoT) recently said gold exports had added to upward pressure on the baht and it would consider steps to reduce the impact. 

The BoT, which is expected to announce new measures soon, may further relax rules on fund outflows, limit some gold-related activity or allow more trading options, analysts and traders say. 

“As we discussed, the BoT wants to control gold traders’ forex transactions during night sessions,” said Tanarat Pasawongse, chief executive officer of Hua Seng Heng Group. “The market is more volatile during such periods,” he said. I

In November, the BoT said it was prepared to approve gold futures trading in foreign currencies in the next phase, after allowing investors to trade gold in foreign currencies and to keep such proceeds in their foreign currency deposit accounts. 



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