By Orathai Sriring and Kitiphong Thaichareon
BANGKOK (Reuters) -Thailand's&nbsp;exports&nbsp;contracted&nbsp;less than expected in&nbsp;May, as higher industrial goods shipments and a weakening baht helped offset some of the impact of sluggish global demand, the&nbsp;commerce&nbsp;ministry&nbsp;said&nbsp;on&nbsp;Tuesday.
Customs-based&nbsp;exports, a key driver of Thai growth, declined&nbsp;4.6%&nbsp;in&nbsp;May&nbsp;from&nbsp;a&nbsp;year&nbsp;earlier, beating a forecast for an 8%&nbsp;year-on-year&nbsp;drop in a Reuters poll.&nbsp;Exports&nbsp;jumped 12%&nbsp;from&nbsp;April.
"A positive factor for overall&nbsp;exports&nbsp;was the weakening baht," Keerati Rushchano, the&nbsp;ministry's permanent secretary,&nbsp;said&nbsp;in a press briefing.
The baht has depreciated 1.8% against the dollar so far this&nbsp;year.
The global economic outlook should also improve, which will be positive for&nbsp;exports&nbsp;from&nbsp;now until the end of the&nbsp;year, Keerati&nbsp;said. The&nbsp;ministry&nbsp;maintains its target of 1%-2% annual export growth for 2023, he added.
While global economic uncertainty has weighed on demand, the global manufacturing sector has shown signs of recovery&nbsp;from&nbsp;production chain disruptions, the&nbsp;ministry&nbsp;said&nbsp;in a statement.
Exports&nbsp;of industrial goods rose 1.5% in&nbsp;May&nbsp;from&nbsp;a&nbsp;year&nbsp;earlier, picking up for the first time in eight months, helped by higher shipments of automobiles and semiconductors.
Shipments of agricultural goods, however, fell 27% in&nbsp;May&nbsp;from&nbsp;a&nbsp;year&nbsp;ago, with rubber down 37%&nbsp;year-on-year. But rice&nbsp;exports&nbsp;jumped 85%&nbsp;from&nbsp;May&nbsp;2022.
Exports&nbsp;to the United States rose 4.2%&nbsp;year-on-year&nbsp;last month, while shipments to Japan fell 1.8%.&nbsp;Exports&nbsp;to China slumped 24%&nbsp;year-on-year&nbsp;due to the country's uncertain economic recovery.
Thailand posted a trade deficit of $1.8 billion in&nbsp;May&nbsp;versus a forecast deficit of $300 million, with imports showing a 3.4%&nbsp;year-on-year&nbsp;drop.
For the January-May&nbsp;period,&nbsp;exports&nbsp;declined 5.1%&nbsp;from&nbsp;a&nbsp;year&nbsp;earlier, imports were down 2.5% and the trade deficit stood at $6.4 billion.
(Reporting by Orathai Sriring, Kitiphong Thaichareon and Satawasin Staporncharnchai; Editing by Kanupriya Kapoor and Rashmi Aich)

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Thai exports drop less than expected in May, seen improving in second half