Slowdown in Export Growth Raises Concerns Despite Strong Yearly Performance
Thailand’s export growth experienced its slowest rate in nearly a year during August, primarily due to the dampening effects of a strengthening Thai baht and the looming impact of tariffs imposed by the United States, as confirmed by the Commerce Ministry on Wednesday.
Despite this notable slowdown, the ministry maintains an optimistic stance, suggesting that the country could still exceed its full-year export growth target, largely thanks to a strong beginning to the year.
Customs-cleared exports for August demonstrated a modest rise of 5.8 percent compared to the same month last year.
This figure, however, fell short of the more buoyant expectations held by market analysts.
The August reading contrasted sharply with a forecast of a 9.5 percent year-on-year increase in a poll conducted by Reuters, and it followed a much healthier rise of 11 percent recorded in July.
Poonpong Naiyanapakorn, head of the Trade Policy and Strategy Office, acknowledged the disappointing figure during a press conference, stating, “The growth was the slowest since September last year and means we are starting to see slowing exports to the United States.”
While exports to the United States, which remains Thailand’s largest single market, still showed a robust jump of 12.8 percent from a year earlier in August, Naiyanapakorn cautioned that this growth rate is expected to slow significantly throughout the remaining four months of the year, reflecting the full impact of global trade challenges on the country’s export growth.
Tariff Impacts and Mixed Market Performance
The slowdown in Thai exports is beginning to feel the pressure from US trade tariffs, although the final tariff rate was less severe than initially feared, leading to mixed performance across key Asian markets.
The United States finalized a 19 percent tariff rate on imported goods from Thailand, a figure that, while impacting export competitiveness, was substantially lower than the more punishing 36 percent rate initially announced.
This final rate is generally in line with the tariffs applied to other countries in the Southeast Asian region, providing some relief but still acting as a drag on future trade volumes.
Poonpong Naiyanapakorn noted that the slower growth in shipments to the US is a key factor behind the overall moderation in Thailand’s export growth.
In contrast to the US situation, shipments to China, another major market for Thai goods, showed continued resilience, rising by 5.9 percent according to ministry data.
The year-to-date performance remains exceptionally strong; in the first eight months of 2025, exports, which are a critical driver of the Thai economy, increased by an impressive 13.3 percent from the same period last year.
Despite the recent deceleration, the Commerce Ministry has decided to maintain its official forecast for export growth for the full year at 2 percent to 3 percent.
However, due to the exceptionally strong start in the early months of 2025, there remains a tangible chance that the final annual export growth figure will exceed this conservative target, demonstrating the country’s underlying export strength before the recent market headwinds intensified.
Trade Balance Shifts Amid Rising Import Demand
The slower August export growth coincided with a higher-than-expected surge in imports, resulting in an immediate trade deficit for the month, while staple exports like rice saw a significant reduction in volume.
In August, the growth rate for imports significantly outpaced exports, rising by 15.8 percent from a year earlier.
This import figure was also markedly higher than the forecast rise of 9.2 percent in the same Reuters poll.
This combination of slower export growth and surging imports immediately led to a trade deficit of US$1.96 billion for August.
This deficit represented a sharp reversal from market expectations, which had predicted a trade surplus of approximately $0.7 billion for the month, highlighting the unexpected volatility in Thailand’s monthly trade balance.
The higher import value likely reflects increased domestic demand for raw materials, capital goods, and possibly consumer products, indicating continued investment and consumption within the Thai economy, which is a positive sign for internal economic activity.
However, the overall trade picture was further complicated by challenges in specific commodity sectors, as the volume of rice exports, a traditional staple for Thailand, fell sharply by 16.9 percent annually.
Addressing these issues in specific agricultural and manufacturing sectors will be crucial for Thailand to sustain its competitive advantage and meet its long-term export growth ambitions, as the global trade environment remains competitive and subject to ongoing tariff and currency volatility.
