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27 Aug 2013


July Exports: Contracting 1.48% Amid Sluggishness in Key Markets Heightened Risk Possible during Remainder of 2013 (Business Brief No.3448 Full Ed.)

The Thai export sector was off to a weak start in 2H13, with July shipments contracting for the third consecutive month at 1.48 percent YoY, suggesting that key trade partner economies remain fragile. This, coupled with the inability of most Thai exporters to address problems with raw material shortages and eroding competitiveness – especially in agricultural and agro-processing exports – since early this year caused 7M13 outward trade to rise just 0.60 percent YoY, equivalent to USD132,368.1 million. It is expected that these factors will continue to pressure export growth over the final five months of 2013, thus making it more difficult to recover, though some supporting factors might emerge later on.
With regard to the outlook over the remainder of 2013, we at KResearch are of the view that Thai export performance will hinge on exports in subsequent months and other factors that could help offset earlier declines, e.g., ongoing attempts by China to maintain their economic growth targets that helped stabilize certain economic activity there in July.

Given this, KResearch has assessed that if China is able to sustain economic growth throughout 2H13 amid improving economic conditions in the US, Japan and the Eurozone, those factors, together with a low 2012 base, should allow Thai exports to recover gradually. As a result, 2013 export growth may lean toward our base-case projection of 4.0 percent, or within 2.0-7.0 percent. Continuing export growth from 1H13 in construction materials, intermediary components and consumer products to ASEAN will no doubt lend support to 2013 exports overall, as well.

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