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21 Mar 2011


March-April Exports Likely Slowdown Amid Japan’s Earthquake (Business Brief No.3065)


Thailand's exports in February 2011 continued to exhibit impressive performance, accelerating 31.0 percent, YoY, representing a record high of USD18.868 billion. Even though a high volume of gold exports was excluded, Thai exports in February still expanded at 24.2 percent YoY, reflecting the resilience of our export industry. However, Japan's catastrophic earthquake and tsunami, leading to the nuclear disaster, which remains very grave, may cause a slowdown in Thai exports at least in March and April.

The initial impacts of those disasters on Thai exports to Japan will be shipment delays and ebbing demand in Japan - Thailand's second major export market - due to eroding consumer sentiment there. In addition, certain Thai manufacturers that are highly dependent on supplies from Japan especially automakers may face a possible production halt if their Japanese auto-parts suppliers cannot resume production within the next 2-3 weeks.

On the other hand, it is expected that certain Thai product categories will stand to benefit from the disasters in Japan, especially food products that will likely see an immediate rise in demand. Moreover, the rebuilding programs post-Japan quake will likely see a surge in demand for many other products in the second half of 2011, such as construction and home-decoration materials, as well as automobiles, electrical appliances and furniture. As a result, it is expected that overall Thai exports to Japan may grow favorably for the entire 2011.

In the short-term, it is expected that overall Thai exports will show a steep decline in March 2011, thought our outbound trade in 1Q11 will probably grow at least 20 percent due to the higher growth, averaging 26.7 percent, recorded in the first two months. For 2Q11, our exports may show a decelerate growth below 10 percent. Given this, KResearch maintains our 2011 growth forecast for Thai exports in range of 8-12 percent. On the base case scenario, we expect that our export growth may reach at least 10 percent this year.