Thailand's outward trade was down 3.38 percent YoY in June, marking the second consecutive monthly decline from a 5.52 percent YoY contraction in May. This reflects continuous pressure on the Thai export sector due to a rapid slowdown in the Chinese economy. The disappointing June export performance coupled with the weak recovery in Thai shipments since the start of the year allowed our 1H13 exports to grow at just 0.95 percent YoY.
Looking into 2H13, it is expected that Thai exports will continue to be threatened by downside risks as in 1H13, including bleak Chinese economic prospects, eroding price competitiveness and a shortage of raw materials. However, KResearch is of the view that economic recoveries in the US and Japan toward the end of the year, plus a low 2012 base should help bolster the value of many industrial exports, e.g., radio & television receivers, computers & components, plastic products and construction materials. Better export performance foreseen in such products, along with continuing growth in machinery, equipment and auto shipments – thanks to strong demand from several markets – should help offset an expected shortfall in agricultural and agro-processing exports during 2H13. As a result, the value of Thai shipments could gradually rise toward the end 2013.
KResearch also believes that the steep June export contraction, despite a low 2012 base, is quite alarming because the prolonged economic slowdown in China will continue to dampen their trade with Thailand and other ASEAN member states this year. Given this, it is likely that Thailand's export growth for 2013 may lean toward the lower range of our projection at 2-7 percent YoY.