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23 Feb 2011


Exports 1Q11: Monitoring Rising Costs and Anti-Inflation Measures (Business Brief No.3047)

Thailand's exports in January 2011 reached USD16.747 billion. Our shipments grew 22.3 percent YoY, rising over the 18.8-percent growth in December. Meanwhile, imports amounted to USD17.604 billion, growing 33.3 percent YoY, higher than the 11.5 percent growth last month. Surging imports put our trade in deficit at USD856.8 million, being the first deficit in six months.
KASIKORN RESEARCH CENTER (KResearch) forecasts that our trade partners' economic growth and an easing Baht may help support Thai exports in 1Q11 which should post hefty growth of 17 percent YoY. Export growth may swing sharply month-to-month. Exports in USD may record only single-digit growth in some months, while shipments in Baht may be negative. Nonetheless, our full-year export performance will likely exhibit growth.
We therefore maintain our export growth forecast at 8.0-12.0 percent for 2011, but revise upward import growth to 12.0-17.0 percent due to higher than expected global oil prices. Among our major export items are automobiles and parts, farm produce, food, electrical and electronic appliances as well as petrochemicals. Despite the January trade deficit, our trade balance for 2011 will likely be in surplus of around USD4.7-8.2 billion, down from USD12.905 billion in 2010 (Customs Department data).

International Trade Projections for 2011
Units: %YoY (unless otherwise stated)
Projection range
Base case
Trade balance (USD billion)
Source: Ministry of Commerce (Customs Department)
Projected by KResearch
Close attention should be paid to soaring raw material and energy prices, especially amid fear that there may later be disruptions to global crude oil supplies amid growing political turmoil in the Middle East and Africa. The latest anti-government activity in Libya - the second largest oil producing country in northern Africa and ninth-ranked in OPEC - has dealt an unexpected blow to oil supplies. Moreover, the higher minimum wages plus rising interest rates could raise Thai exporters' operating costs. These negative factors may dent exporters' operating margins, given thier limited negotiating power.

On the demand front, close attention should be paid to inflation and resulting anti-inflation measures instituted by central banks around the globe. Runaway inflation may not only hit consumer purchasing power, but also affect global monetary policy. In Asia, the bullish interest rate trend may become more aggressive in magnitude and timing. In advanced economies, e.g., the Eurozone and US, a bullish interest rate cycle may come earlier than expected. Amid a rising interest rate trend, household's borrowing ability will be adversely affected, which would then dent consumer spending, and eventually, our exports.