Thailand's exports in July expanded 38.3 percent YoY – the highest growth in 13 months – and export value hit a record high of USD21.521 billion. The hefty growth stemmed largely from a recovery seen in industries hit hard earlier by the Japanese triple disaster, gold shipments growing more than 3,900 percent, high growth of agricultural exports, plus accelerating growth of Chinese import demand; the figure was also aided by a low base from last year.
Looking closely, July export growth was mainly driven by temporary factors. Excluding gold shipments and seasonal factors, exports dropped from the previous month's performance (exports excluding gold shipments expanded only 32.1 percent YoY). We also note that exports to China typically swing over-month. In July, substantial growth in shipments to the mainland reflected inventory restocking by Chinese businesses that may soon peak.
On the global front, weakening US and Eurozone economies have caused many to fear that they may concurrently succumb to double-dip recessions. However, such scenario, even worst-case is less likely. Thai exports may receive support from improving industries that had earlier been plagued by the Japanese catastrophe. Meanwhile, ample demand for farm goods and their relatively high prices plus brighter prospects in Asian economies may help ameliorate the adverse impacts of the global slowdown.
KASIKORN RESEARCH CENTER (KResearch) forecasts that exports over the remainder of this year may grow around 13.0 percent, or in a range of 6.0-17.5 percent. Despite slowing from the growth of 25.7 percent achieved in 7M11, such a figure is still considered healthy. On the downside, the faltering US and Eurozone economies may dent our export shipments to single-digit growth over the final two months of 2011.
For our full-year export performance, KResearch maintains our projection at 20 percent YoY, or somewhere within a range of 17.0-22.0 percent, with exports totaling USD226-236 billion (equivalent to around THB7 trillion). We reiterate that the fragile global economy still needs close monitoring.