November Exports Shrinking 18.6 %, Bad Omen for 2009 (Business Brief No.2385)

• Thai exports in November 2008 showed a worse than expected contraction, totaling USD11.87 billion, down 18.6 percent YoY. This data, which shows the lowest performance in six years, and against the 5.2 percent growth of October, came after export growth averaged as high as 24.3 percent during the first three quarters of this year. The contraction is attributed in part to the seizures of Suvarnabhumi and Don Mueang airports by anti-government protesters that resulted in export losses of USD1.3 billion during the last five days of November. Our analysis has found that exports in November decreased 10 percent, when excluding the effect of the airport seizures. Therefore, the global economic downturn can also be seen as a major cause for falling exports in November.
• Looking at each market, slowing exports were seen in all major markets, including the US, the European Union and ASEAN, plus some relatively new markets such as China and Australia, etc. However, other emerging markets for Thai exports that include India, Eastern Europe and the Middle East were still recording growth. Thailand's ebbing exports were in line with other Asian countries due to the fallout of the global economic weakness. As the global financial meltdown has yet to see bottom, the world's economies will remain listless in the next quarter. Worse, a ripple effect may be felt in the real economy, especially in employment, which will in turn hamper global economic recovery – likely to be a lengthy process.
• KResearch forecasts that exports in December will continue to see contraction, albeit to a lesser degree than the November data that was hurt by the airport seizures. Shrinking exports during the final two months of this year may put 2008 full-year export growth at around 15.5 percent, down from the 17.2 percent in 2007. Exports are expected to continue to experience contraction into 1H09, but may see recovery in 2H09, especially if advance orders resume. KResearch forecasts that Thailand's exports for 2009 may grow in a range of 0.0-5.0 percent.

The global economic fragility will remain the main threat to Thai exports. It should be monitored as to how fast and effective the expansionary monetary and fiscal polices being implemented worldwide will be toward ameliorating the global economic recession.