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19 Jan 2010

Thai Economy

Exports, 2010: Up 9-12%...Led by Commodities, Food & Hi-Tech(Business Brief No.2735)

Exports in December 2009 rose highest in 17 months with an export value of USD14,629 million, representing 26.1 percent growth for the month YoY, increasing over the USD13,840 million achieved in November. This was second consecutive month of growth due partly to the low base effect of 2008. The seasonally-adjusted export value was equivalent to a 14.4 percent increase over November (MoM), mainly due to the increased purchase orders in the categories of goods where prices are expected to rise soon such as farm produce and other commodities, etc.
The high contraction in exports during the first 10 months of 2009 resulted in an overall contraction of 14.2 percent to USD152,502 million, from USD177,775 million exported in 2008…a historically high shrinkage. However, taking other major exporting countries in Asia into comparison, Thailand's contraction in exports was less severe than many others such as those of Japan, Malaysia, the Philippines and Taiwan that might contract more than 20 percent, while China, India and Indonesia had shrunk more than 15 percent.
Looking at the economic impact of that export deterioration due to the global recession, however, Thailand was one of the most affected countries in the region, after Hong Kong, Malaysia and Taiwan, because we depend on exports as a rather high proportion of our total product output. Falling (gross) exports took 7.3% from Thailand's GDP in 2009.
In 2010, KASIKORN RESEARCH CENTER (KResearch) projects that it is quite possible that Thailand's exports will return to growth of around 10.5 percent, and surely be within a projected range of 9.0-12.0 percent, due partly to the low base effect of 2009. Important supportive factors for export recovery would include the global recovery, plus a brighter trend for farm produce exports and tariff reductions due to many FTAs.
Nevertheless, Thailand's exports in 2010 will still be subject to certain risks that need caution. They include fragile recoveries in key trade partner countries, stricter international trade measures and the stronger Baht that might affect our price competitiveness in some categories. Domestic factors that we must pay attention to would include the competitiveness of Thailand's export industries as well as domestic politics that may affect the confidence of international buyers toward the timely delivery of orders placed here with Thai producers; thus, buyers may diversify such risk by buying from other countries, as well.
Classified by product category, healthy exports are expected for commodities, as well as food and hi-tech items. Exports that should grow well (more than 10 percent) include rice, rubber, refined petroleum motor fuels and lubricants, base metals, rubber products, plus automobiles and parts. Most items in these groups are commodities already undergoing a rising price trend or those that had contracted severely last year.
Export categories that are expected to grow only moderately (between 5-10 percent) would include general food items, shrimp products, electronic goods, electrical equipment and parts, jewelry (excluding gold), plastic pellets, etc.

Goods that may grow, but still need caution, wouldinclude textiles and garments, footwear and leather products due to high competition in the market and Thailand losing comparative advantage in production cost due to exchange rates relative to those of our rivals such as Vietnam and China. Meanwhile, some other export categories such as furniture and plastic products will continue to face problems due to high competition and other factors.

Thai Economy