Thai Export Pain Set to Continue Despite Mideast Truce

Why It Matters

The limited export outlook threatens Thailand’s trade balance, curtails GDP growth, and adds inflationary pressure, signaling heightened vulnerability for the region’s export‑driven economy.

Key Takeaways

• Strait of Hormuz reopening with tolls raises shipping costs for Thai exporters
• SCB projects Thai export growth of only 0‑1% this year
• Middle‑East demand for Thai autos and food declines amid conflict
• Rising oil prices push transport costs, fueling inflation in Thailand
• US import duties could further compress Thai export volumes in H2

Pulse Analysis

The ongoing war in the Middle East has turned the Strait of Hormuz into a strategic bottleneck for global oil and cargo flows. Iran’s proposal to reopen the waterway only under a toll regime means higher freight rates for vessels bound for Asia, directly affecting Thailand’s export logistics. Coupled with oil hovering around $80‑$85 per barrel, the cost pressure ripples through the supply chain, eroding profit margins for Thai manufacturers that rely on timely, affordable shipping.

Domestically, Thailand’s export profile is feeling the squeeze on two fronts. Demand for automobiles and food products in Gulf markets has weakened as regional consumers tighten spending amid geopolitical uncertainty. At the same time, delayed imports of fertiliser and petrochemicals hinder the production of higher‑value goods. SCB Economic Intelligence Center’s modest 0‑1% growth forecast reflects these headwinds, while Krungsri Securities cautions that any U.S. import duty hikes could further depress shipments in the latter half of the year, raising the risk of an outright contraction.

Beyond trade figures, the ripple effects extend to inflation and growth. Elevated oil prices lift transportation costs, feeding into higher consumer prices and threatening to push Thailand’s inflation trajectory upward. Economists at CIMB Thai Bank warn that a sustained $100‑per‑barrel oil price could shave 0.4‑1.3 percentage points off GDP growth, potentially stalling investment projects. With the Thai economy already described as “very fragile” for Q2, policymakers will need to monitor Gulf developments closely and consider fiscal or monetary tools to cushion both export performance and domestic price stability.