The global economy is experiencing more risks, including the novel coronavirus (COVID-19) outbreak seen in many countries since early 2020. As a result, Thailand's exports of gold, being a safe-haven asset, skyrocketed 299.6 percent YoY in January 2020, allowing Thai shipments overall to resume growth for the first time in six months of 3.35 percent YoY. Excluding the value of gold exports, Thai shipments overall shrank 1.45 percent YoY, bettering the 2.95 percent YoY contraction projected by analysts.
The better-than-expected growth in January exports was partly due to the signing of the first phase of a long-awaited trade deal between the US and China, which has helped ease murky conditions in the global trade. In addition, it was also supported by a low export base of 2019 to China as a result of the US-China trade war, the sluggish Chinese economy, relatively low crude oil prices and weakening demand for cassava products. Thai merchandise exports to China and the US, therefore, grew 5.2 percent YoY and 9.9 percent YoY during January 2020.
However, the impact of the COVID-19 epidemic via trade and supply chain with China may further hurt Thailand's international trade after China's manufacturing sector has been suspended following its decision to shut down 18 cities towards the end of January. Although China (as of February 24, 2020) lifted a lockdown in some cities, its industrial sector has yet to resume operations at full capacity and this will likely hurt demand for Thai exports. Currently, our intermediate exports to China account for 45 percent of the total shipments to China. The closure of land border checkpoints between Vietnam and China has directly affected Thai fresh fruit exports to China via repackaging in Vietnam, as well. KResearch will continue to closely monitor the situation. Preliminarily, we maintain our 2020 growth projection for Thai exports at (-)2 to 1 percent.