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20 Nov 2009

Thai Economy

October Exports Contract 2.98%, but Nov-Dec May Grow 20% (Business Brief No.2690)

Thailand’s exports in October 2009 had improved further, contracting only (-)2.98 percent YoY. This is the smallest contraction in 12 months, achieving a value of USD14,813 million, slightly lower than the September figure. Taking the seasonally-adjusted (SA) results into consideration, we have found that exports had grown 1.6 percent MoM, against 88 percent growth in September, the highest growth in 20 months. October exports, when excluding gold, however, contracted 4.4 percent YoY, moderating from the (-)12.7 percent YoY contraction of September.
Imports in October had a value of USD13,050 million, up from USD12,925 million in September, though contracting 17.5 percent YoY, thus at the same level as in September. The trade balance in October was in surplus of USD1,763 million, falling slightly from the USD1,980 million surplus in September. Overall for the first 10 months of 2009 (10M09), exports totaled USD124,114million, contracting 19.6 percent, while the import value was USD106,594million, contracting 31.2 percent. The trade balance was in surplus of USD17,520 million, versus the deficit of USD1,448 million over 10M08.
Notably, most export categories improved in October. Many major items that that had been in contraction this year returned to growth, e.g., integrated circuits, air-conditioners and parts, radios & television receivers & parts, electrical equipment & parts, rice, chemical & rubber products, sugar, cosmetics, soap & skin care products, books & printed materials, tapioca products, aircraft parts & aviation-related equipment, chilled & frozen shrimp, etc.
As for export markets, Thailand’s exports to China regained healthy expansion in October. The export growth to new markets was higher than the growth of the traditional market this year, boosting the proportion of exports to new markets this year to 53.3 percent of our total exports, from 48.5 percent in 2008.
Concerning the near-term export trend, KASIKORN RESEARCH CENTER (KResearch) expects that in November and December, exports may grow around 20 percent per month, resulting in 4Q09 exports growing around 11 percent. Thailand’s overall exports for 2009 are projected to contracted (-)14 percent overall, but are expected to grow 9.0-13.0 percent in 2010. A determining factor toward the export direction next year will be the continuity of economic recoveries in key markets, particularly the G-3 countries, which still face high unemployment problems causing weak consumption. Therefore, the controversial question will still be whether growth will be sustainable after economic measures gradually end in the near-term.

One factor likely to have positive effects on Thailand’s export in 2010 would be commodity prices, particularly in the possibility that many categories of farm goods will become dramatically more expensive next year, plus the benefits of tariff reductions to duty-free status per free trade agreements beginning January 1, 2010. A factor that may affect Thai exporters will be the trend of Baht appreciation that may reduce exporters’ incomes in Baht, plus tough industry competition, trade barriers and problems in Thailand-Cambodia relations.

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