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24 Sep 2020


August Exports Contracted Slower than Expected at 7.9%, but Close Attention Must be Paid to Global Economic Risks (Business Brief No.3886)


               Thailand's outward trade contracted 7.9 percent YoY in August 2020. As a result, 8M20 exports shrank 7.8 percent YoY. Excluding oil, gold and arms exports, Thai shipments, however, contracted 14.1 percent YoY in August 2020, accelerating over the 13.0 percent YoY shrinkage reported for July 2020. August gold exports skyrocketed 71.5 percent YoY, whereas shipments of industrial and agricultural exports recorded steady contractions, in particular automobiles, machinery, iron, integrated circuits, plastic pellets, refined petroleum products, rubber, fresh, chilled and frozen fruit, rice and refined sugar. Steady export growth were seen in work-form-home related products, home electrical appliances, products related to the prevention and reduction of disease transmission, some types of food, rubber gloves, cassava products, canned tuna, pet food, refrigerators, microwave ovens, washing machines, computers, furniture and related parts.

                Considering an individual market for Thai exports, the US is the only market where the value of Thai exports grew at 15.2 percent YoY in August 2020, though at a slower pace than that reported for July 2020. However, shipments to other markets recorded steady contractions. Thailand's outward trade to China posted a steeper contraction of 4.0 percent YoY in August 2020 because of weak demand and flooding despite a recovery seen in the overall Chinese economy. 

               ​Although 8M20 Thai shipments contracted at a slower pace than that projected previously, 2020 Thai exports may continue to experience global economic risks and increased volatility in the Baht. Regarding the global COVID-19 pandemic, there is high risk of a resurgence, especially during winter. Meanwhile, many countries in Europe are struggling with the second wave of the COVID-19 pandemic, which looks to be much worse than the first, triggering concern over another lockdown. Regarding Brexit, it is highly likely that the UK will leave the European Union without a deal on January 1, 2021. If so, this would steepen volatility in global financial markets while the US-China tensions will likely flare. Such factors are bound to pressure the global trade and economy, going forward.  Amid downside risks seen in the global economy, Thai exports may continue to be pressured by weak global demand while gold exports will still be an important variable causing Thai exports to remain volatile. KResearch will continue to closely monitor those factors and for the time being maintain our 2020 export growth forecast at a contraction of 12.0 percent. However, it is likely that the value of Thai exports for 2020 will contract at a slower pace than our prior estimate.