October export figures reflected the impact of flooding on our industrial sector. Flooding has not only deferred production at plants within stricken areas, e.g., industrial estates in Phra Nakhon Si Ayutthaya and Pathum Thani, but also affected assembly lines located in other dry areas that depend on components from inundated plants, as well as some factories in flood-prone areas, such as in Bangkok and Samut Sakhon, as their production was precautionarily paused on flood warnings. As a result, October exports dropped to only USD17.192 billion (down from USD 21.511 billion in September), with growth of only 0.3 percent YoY.
Three key product categories severely affected by flooding include electronics – contracting (-)22.1 percent, automotive vehicles and parts – contracting (-)17.4 percent, and electrical appliances and parts – contracting (-)14.5 percent. Those three categories account for about 40 percent of all Thai exports. Other deep contractions were noted in rice, textiles, garments, shoes, lenses, furniture, tableware and kitchenware.
KResearch expects that the losses may result in lower export growth of 15.5-16.7 percent YoY, against around 20 percent forecast earlier. The November export value will likely drop to the lowest level in 16 months to around USD15-16 billion, and may contract more than (-)10 percent YoY. Meanwhile, YoY contractions may continue into 1Q12. Some factories indirectly hit by flooding have already restarted production, while manufacturing at other plants located in recovering industrial estates should resume within December. Nevertheless, the overhaul of some flood-damaged machinery may take over three months.
Given the above factors, coupled with pressure from the global economic deceleration amid the Eurozone debt crisis, KResearch expects that 2012 exports may grow only 5 percent, or move within a range of 2-8 percent.
KResearch views that the losses to Thai exports may reach USD12.4-14.8 billion (THB380-450 billion). Aside from the short-term impact of deferred production within the production and export sectors, multinational investments into Thailand may be hurt as well, thus dampening our future export potential as over 70 percent of those investing in industrial estate zones are foreign firms. Therefore, the planning of integrated water management, as well as construction of flood-preventative infrastructure in industrial zones and business districts, will need to be accelerated. Also, support and rehabilitation programs for flood victims will be important challenges to the government where concrete solutions and implementation will be needed before the flood season next year. These measures would help restore investor confidence, the key factor developing sustainable economic stability for our country.
Thai Export Estimates, 2011-2012
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Indicators
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2011F
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2012F
|
|
Export Value (Million USD)
|
223,700-226,000
|
228,200-244,100
|
|
Export Value (Million THB)
|
6,800,000-6,900,000
|
6,850,000-7,320,000
|
|
GDP Growth (%)
|
1.5
|
3.5-4.8
|
Source: Estimates by KResearch, based on BOT and NESDB data (on balance of payments)
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