Thailand's manufacturing and export sectors did not look so rosy in February as the over-year export performance slid for the first time in six months to 5.83 percent YoY – equating to USD18.0billion in value – whereas imports grew 5.27 percent YoY to USD19.5 billion. Due to a substantial over-month decline in the import value, Thailand logged a narrower trade deficit of USD1.6 billion. The disappointing February export performance affected the domestic manufacturing sector, as reflected in a decline seen in the Production Index for export-oriented industries, leading to a 1.19 percent YoY drop in the Industry Production Index overall in February.
Fewer workdays and a high 2012 base were largely responsible for the ebbing exports and industrial production in February after recording steady growth in preceding months. The declines were consistent with steepening volatility in the global economy and the appreciating Baht. However, we at KResearch are of the view that Thailand's manufacturing and export sectors will resume healthier growth in coming months along with the growing economic performance of key trade partners, e.g., China, ASEAN, plus Japan and the US that should be able to sustain economic growth, thanks to their economic stimuli. As a result, we expect that Thai 2013 exports should achieve growth of around 8.0-13.0 percent YoY if the Baht stays close to THB29.50/USD.
Close attention should be paid to the effect of the fast-rising Baht on the recovery of several export product categories – especially agriculture and agro-processing – as well as on other labor-intensive products that have begun to lose their competitiveness.
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