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19 Feb 2009

Thai Economy

January Exports at Record Low – Outlook and Solutions for Thai Exporters (Business Brief No.2436)

The latest international trade data from the Ministry of Commerce released on February 19, 2009 showed that Thailand's exports in January 2009 had continued to contract severely. KASIKORN RESEARCH CENTER (KResearch) expects that the impact of the global recession on Thailand's exports will worsen throughout at least 1H09. Important points include the following:
Thailand's exports in January 2552 were valued at USD10,496 million, falling 26.5 percent YoY, which was a historically deep contraction. Exports have exhibited a double-digit contraction for three consecutive months since November 2008. However, imports in January were valued at USD9,119 million – falling 37.6 percent – contracting more than exports. Therefore, the trade balance this month showed the highest monthly surplus in 8 months at USD1,377 million.
KResearch projects that the double-digit contraction rate will carry on until the end of 3Q09. A recovery in exports is still beyond sight as their performance will depend on economic recovery in the world's major trade destinations, particularly the USA.
Due to the increasing risk that the emerging economies will fall into recession too, KResearch has reduced our forecast on Thai export performance in 2009 that it may contract around 10.0-16.0 percent YoY, more than our former projection of a 7.0-12.0 percent contraction, which would then be the most serious export deterioration in Thai history.
Amid the crisis in export business, each export category will be affected differently.
KResearch has studied the impact of the global economic crisis on Thai exports and rated the extent expected to be seen:
  • The product categories that will be most seriously hit and recover slower would be cars and auto-parts, machinery, aircraft parts, household electrical appliances and furniture.
  • The product categories that will be seriously hit, but may recover sooner would include electronic parts, such as hard disk drives and semiconductors.
  • Commodities will be seriously affected. However, a recovery might be seen when the global recession begins to bottom out because investors will then turn to riskier assets, such as equities and commodities.
  • The product categories that will be moderately affected would include everyday necessities, such as garment, apparel, leather goods and perhaps toys. Although these product categorieswill likely tend toward lower contraction than other categories, some manufacturers might face tougher competition.
  • The product categories that will be only slightly affected would include food and other essentials, so the exports of these products should remain high.

Overall, amid the global economic downturn affecting Thai export sectors, entrepreneurs should adjust themselves and seek new markets to compensate for the lower purchasing power in many markets. Nevertheless, they should be cautious about entering new markets and seek high-end consumers. In addition, entrepreneurs should keep an eye on each government's intervention measures and seize new marketing opportunities because this will help them formulate export strategies to survive this crisis.

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