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22 Jan 2018

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Export in 1Q18 slowing due to 2017 base effect after surging 11.7% in 4Q17 (Business Brief No.3723)

Thailand saw a trade deficit in December 2017 for the second time in the year (after one in July 2017) due to higher than expected imports that had risen 16.6 percent YoY, while exports decelerated to only 8.6 percent growth YoY due to comparison with a high 2016 base. Thailand thus recorded a trade deficit of US$278.1 million in December 2017, trimming our trade surplus for the entirety of 2017 down to US$13.93 billion.

Looking ahead further into 1Q18, a continuing global economic recovery should be the main driving force for Thai outbound trade, but its pace will likely slow down due to high 2017 base. In particular, shipments of petroleum-related products have begun to lose their steam since late in 2017. Attention should also be given to other factors pressuring certain export categories previously enjoying high growth in certain markets, e.g., the delayed renewal of the US Generalized System of Preferences (GSP) benefits to Thailand, and Vietnam’s decision to issue Decree No. 116/2017/ND-CP, which sets out conditions for the manufacture, trade and importation of automobiles, effective January 1, 2018.

KResearch projects that Thailand’s total export and import values over 2018 should rise 4.5 percent and 8.0 percent, respectively. However, over the remainder of the year, increased monitoring will be needed toward issues such as the renewal of GSP benefits, US trade protectionism and movements in the Thai Baht that are likely to be affected by greenback volatility, given external and domestic situations vis-à-vis the US, amid Thailand’s strong economic fundamental with a relatively high current account surplus at around 9 percent of GDP in 2018.

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