The slowing global economy, impacts of the US tariff hikes on Chinese imports, a cyclical downturn in electronic products, low global crude oil prices and the high base of 2018 all pressured Thai exports to shrink for the third consecutive month at 5.65 percent YoY in January 2019. Shipments of other Asian countries, including Singapore, Japan and South Korea, also reported sharp contractions during this period.
Notwithstanding this, KResearch maintains our growth forecast for 2019 Thai exports at 4.5 percent or within 2.0-6.0 percent. We view that Thai shipments may contract 8.0-4.0 percent or approximately USD19.3-20.1 billion/month during 1Q19 due to the abnormally high base of 1Q18 when compared to other quarters in 2018 as a result of specific factors, including the G2G rice deal and exports of special items (in the aircraft, spacecraft and related parts categories) to Japan. However, we project that they will gradually pick up during the final three quarters of 2019 partly because the US-China trade tensions show positive signs of improvement, i.e., the US may delay the tariff hike on Chinese imports from 10 percent to 25 percent scheduled for March 1, 2019, until the two countries complete their trade talks. This may help ease the impacts of trade war somewhat, though close attention must be paid to the sluggish Chinese and Eurozone economies, plus low commodity prices, because they will likely affect the Thai export performance over the long term.