In October, Thailand reported higher export growth to China than to the traditional markets of the US and Europe. That growth rate was also higher than our overall export rate. Exports to China totaled USD2.3 Billion, up 21.1 percent YoY, compared to just 0.3 percent for overall outward trade that month. However, October exports still contracted 22.5 percent MoM due to several adverse effects, e.g., 1) slowing Chinese industrial and service sectors due to sluggish economic conditions seen in China's key trade partners, and 2) tightened monetary policy since early this year.
Meanwhile, the worst flooding in Thailand that has caused substantial losses to agriculture and industry, as well as disrupting domestic supply chains, may diminish Thai 4Q11 exports to China. As a result, Thai export growth to China in 2011 may decline to 27-30 percent, from the 33.2 percent recorded in 2010. Nevertheless, China remains a key market helping to drive overall Thai exports into 2012.