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3 Oct 2008

Thai Economy

Thai Exports to China Decelerating with Global Economic Crisis (Business Brief No.2307)

The Chinese export sector has felt the pinch of the global economic slowdown. This has begun to take a toll on their demand for imports needed for the industrial sector since August 2008. China's need for Thai imports have likewise declined, with a YoY decline of 1.4 percent in August, representing the biggest drop since the beginning of 2008. This has been seen largely in the value of imports such as chemical products, printed circuit boards and refined petroleum products, which are used by the industrial sectors. Other Thai exports, including computers, related equipment and parts, plus plastic pellets, wood and its related products also suffered similar fate in August. KASIKORN RESEARCH CENTER (KResearch) expects that the weakening Chinese export sector will dampen Thai exports to China in 2008 to 18-22 percent, down from 26.3 percent in 2007.

If the US is able to constrain the financial crisis from hurting their real sector, it is expected that the impact of that crisis on other economies, especially China, will be limited, thus relieving their export sector, which would then benefit Thai exports to China. Currently, China is considered a primary growth engine for the Asian economy due to their robust growth in consumption and double-digit GDP growth over the past five years. Currently, China is Thailand's third largest export market, accounting for 9.5 percent of Thailand's total exports, in 2008, compared to 4.4 percent of 2001.

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Thai Economy