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25 Nov 2019

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10M19 Shipments Shrank 2.35% 2019 Export Growth Forecast Revised Downward to (-) 2.5% (Business Brief No.3834)

The value of Thai exports reached USD20,757.78 million in October 2019, shrinking 4.54 percent YoY. As a result, 10M19 shipments contracted at a faster pace than that seen during 9M19 of 2.35 percent YoY. The shrinkage in October exports was due to a number of factors, including persistent sluggishness seen in the global economy, the US-China trade dispute and volatility in the value of Thai gold exports, which reverted to a contraction of 22.24 percent YoY after posting high growth, thus serving as an export driver over the past 2-3 months. It was also caused by a high base of 2018 global crude oil prices, which caused the value of our oil-related exports to decline. Excluding the value of gold and oil-related product exports, Thai shipments contracted 1.2 percent YoY in October 2019.

Thai exports to the US recorded growth for four straight months at 4.80 percent YoY in October, which were on the contrary to steady contraction seen in Thai shipments overall. It was found that Thai exports that performed well in the US were those that Washington imposed tariffs on Chinese imports, suggesting that Thailand partially stands to benefit from import replacement by the US. On the other hand, our shipments to China reverted to a contraction of 4.2 percent YoY in October 2019 as a result of a substantial shrinkage in oil-related product exports.

Given this, KResearch has decided to revise downward our 2019 growth forecasts for Thai exports and imports to (-)2.5 percent and (-)5.0 percent as we expect that exports and imports will likely contract further during the final two months, caused partly by continuing slowdown in the global economy, heightened uncertainty surrounding the US-China trade war while the Baht, which continues to strengthen compared to regional peers, will likely undermine the competitiveness of Thai exporters.