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23 Dec 2019

Trading

Global economic slump sinks Thai exports, leading to a contraction for a fourth-straight month in November 2019 (Business Brief No.3840)

​ Thai exports in November 2019 totaled USD19.657 billion, dropping below USD20 billion for the first time in seven months and plunging for four consecutive months by 7.4 percent YoY, which marks the worst contraction in 43 months. Consequently, Thai exports in the first 11 months (Jan-Nov) of 2019 shrank by 2.8 percent YoY. Thai consignments in November 2019 fell virtually in every major market, reflecting the poor economic performance of Thailand's major trading partners. There is an exception, though. Thai exports to China rebounded for growth of 2.3 percent YoY, consistent with the surprising gain of China's manufacturing sector of 6.2 percent YoY in November. China's upward momentum raised demand for raw materials and semi-raw materials imported from Thailand. Nonetheless, the surge may be short term and it does not significantly change the export outlook in the future.

Thailand's outbound shipment in 2019 is projected to contract 2.5 percent or be slightly worse.

The exports in the final month of 2019 are likely to continue falling for the fifth consecutive month due to the global economic slump and the strong Thai Baht. Despite the recent positive signs in the US-China trade dispute after both countries agreed on the Phase-One trade deal in December 14, 2019 (the agreement is set to be inked early January 2020), delaying the tariff increase by both sides from the initial schedule on December 15, 2019, the latest development is unlikely to change the outlook of Thai exports next year. This is because the agreement is simply the Phase-One deal of the prolonged conflict and the trade disputes between the US and China are unlikely to be sorted out soon. KResearch, hence, views that Thai exports in 2020 will continue decelerating by 1.0 percent (within the estimated range of -2.0 to 1.0 percent) by taking into consideration the slowing economic performance of Thailand's trading partners and an upward direction of the Thai Baht, which will weigh down on the pricing competitiveness of Thai exporters.