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21 Oct 2019


Slowing economy causes Thai exports (excluding gold) in 3Q19 to shrink 4.5%, exports in 4Q19 may come back into positive territory due to front-loading (Business Brief No.3827)


​Thai exports in September fell from the previous month, lower than the consensus of the analysts. The lackluster performance is in line with exports of other countries in the region which were affected by the worse-than-expected global economy and the prolonged trade war between the US and China. Outbound shipments from Thailand in September 2019 declined by 1.4 percent YoY. Although the figure is better than a 4-percent drop in the previous month, it is worse than the market consensus. In September, the value of main Thai farm exports such as rice, rubber and tapioca products contracted at a double-digit rate, dragging on the overall Thai outbound shipments. At the same time, the Thai industrial exports in September bounced back to positive territory, increasing 0.2 percent, driven by the shipments of vehicles, auto parts and components, electrical appliances and gold which continued to expand. Excluding gold consignments, the Thai exports would have contracted 2.8 percent YoY.

Thailand's exports to the US and Chinese markets registered growth, countering the overall pattern of Thai exports to other markets, which saw a contraction. The expansion in the two markets is partly attributed to the low base effect in the previous year when Washington upped the ante on its trade war with Beijing. Also, Thai outbound shipments benefited from the latest round of  tit-for-tat measures as China announced the raising of tariffs on  American vehicles to 25 percent (effective December, 2019), prompting  front-loading as Chinese importers have moved forward their orders of Thai automobiles, parts and components, resulting in a jump in consignments from Thailand.

In September 2019, Thailand recorded a trade deficit in the gold trade for the first time in four months to the tune of USD199.5 million. Consequently, the Thai trade surplus in September dropped from the previous month. The gold factor eased the pressure on the strengthening Thai currency in September.

KResearch maintains our projections for Thai export growth in 2019 within the range of minus 2 percent to flat growth of 0.0 percent. In 4Q19, the outbound trade from Thailand should return  to positive territory, thanks to the low base effect from the previous year that was caused by the trade war between the US and China. Moreover, the US and China are likely to speed up the front-loading of imports to avoid punitive tariffs that will become effective on December 15, 2019.