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20 Jan 2012


Exports May Resume Growth in 2Q12 (Business Brief No. 3233)

International trade data for December 2011, as released by the Ministry of Commerce, pointed to a recovery in Thai exports hit hard by widespread flooding during October and November 2011. Meanwhile, accelerating imports may signal progress in restoration at affected factories, a prelude to the return of normalcy in industrial production within the next few months.
Exports contracted by only 2.0 percent YoY in December, rising sharply over a shrinkage of 12.4 percent YoY in November, whereas imports returned to growth of 19.1 percent YoY, after plunging 2.4 percent in November. Thus, Thailand suffered a trade deficit of USD 2.13 billion in December, being the third straight month of negative gap, following a shortfall of USD1.37 billion in November.
We at KResearch are maintaining our previously reported perspective that there will be continually shrinking outward trade in 1Q12 (contracting 7.0 percent YoY in our base case, based on BOP, in 1Q12 due in part to a high base in 2011), given that the manufacturing sector has emerged from the severe flooding late last year. At the same time, major trade partners, e.g., China, Europe and Japan may record slowing economic momentum, plagued by the persistent sovereign EU debt crisis.
Rising imports, post-flooding – especially those of capital goods and raw materials – would be a positive signal toward a gradual rebound in industrial production which may return to normalcy within 2Q12, as many expect, leading to a recovery in export shipments in tandem. Outward trade is also expected to keep growing into 2H12 thanks to a low base of comparison, over-year.

As for the overall outlook on 2012, KResearch holds the view that Thailand may post 5.0 percent export growth (in our base case), or be within our projected range of 2.0-8.0 percent, compared to the 17.2-percent growth achieved in 2011.