October Exports Lower than Expected…But Recovery Signs Emerge (Business Brief No.3384 Full Ed.)

Thailand's October exports, as reported by the Ministry of Commerce, expanded 15.57 percent YoY, being the second consecutive month of increases. Even though it was lower than our earlier projection of of 20.0 percent growth, improvements were seen in shipments of agribusiness products and various items of industrial goods. Meanwhile, imports fared better than expected, soaring 21.6 percent YoY, led by capital goods, raw materials and intermediate goods. This may be a prelude to rising demand in trade partner economies, which would be a boon to Thai outward trade, going forward.

As for the remainder of 2012, KResearch has assessed that despite exports being encumbered by the global malaise, e.g., the Eurocrisis that is unlikely to be resolved soon, 4Q12 data may show growth in excess of 20 percent YoY, thanks to a low 2011 base as a result of massive floods then.

With several positive factors ahead, especially in 4Q12, 2012 full-year export performance should be on a par with, or slightly lower than, our base-case projection of 5.0 percent growth. Among those factors would be a revival in the Chinese economy, Thailand's largest trading partner, with clear signs of improvement during 4Q12; thriving trade within ASEAN – e.g., Indonesia, Malaysia and Singapore – and post-Hurricane Sandy reconstruction efforts that will help boost certain exports to the US market in the coming months. Our shipments to the US are thus projected to grow 6.0 percent YoY in 2012, and may expand throughout 1H13 if the US ‘fiscal cliff' – a key variable to the US growth – is averted.