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22 Apr 2010

Thai Economy

30% Export Growth Expected in 1H10: Hope for Economy during Crisis (Business Brief No.2808)

Thailand's exports grew 40.9 percent in March YoY, which was the highest growth figure in 20 months, while the value was the highest in 18 months at USD16,253 million. Meanwhile, imports in March managed high growth of 59.7 percent YoY, despite at a slower pace from the 71.2 percent in February. Imports rose to a 17-month high with a value of THB15,099 million. Our trade balance in March was in surplus by USD1,155 million, increasing over the USD440 million surplus in February.
One notable point for exports in March was that most major export categories saw high growth. In major export markets, our growth accelerated more than in newer markets this year, thanks to full regional liberalization per the AFTA, boosting Thailand's exports to ASEAN. Another notable point was that exports to FTA partners had grown more substantially than to other regions, with an average growth figure of 55 percent in March, while the average growth to other regions was only 27 percent.
Overall, Thailand's exports in 1Q10 recovered with unexpected rapidity at 31.6 percent growth YoY. KASIKORN RESEARCH CENTER (KResearch) expects that exports in 2Q10 will carry on with similar growth, resulting in Thailand's exports 1H10 might grow as healthily as 30 percent. However, export growth in 2H10 might decelerate due to a relatively high base effect from last year.
KResearch expects that total exports for 2010 may reach high growth of 17.0-24.0 percent, if the global economy continues with its recovery. As exports are the main hope to lead the Thai economy out of the political malaise we are now facing, taking care to see that exports prevail is an important means by which the government may pursue their growth targets for 2010.
In 2010, export-related government agencies should beware that many foreign trade partners may worry about the current political turmoil in Thailand. They should, therefore, consider launching some proactive PR campaign to ease concern of customers overseas. These should be continuous activities in major export markets to allow export-oriented producers to directly meet their trade partners. This would help maintain export orders when some foreign trade partners may hesitate to travel to Thailand for participation in trade exhibition or for negotiations in Thailand.
Meanwhile, the government should prepare alternative logistic routes for emergencies where goods cannot follow normal routings, so that exports can continue without interruption. Moreover, the authorities should undertake public relations to entice businesses to use the full benefits of FTAs to expand their export markets.

In the matter of the Baht, some entrepreneurs are concerned about volatility, so the authorities should monitor the Thai currency and prevent excessive fluctuation or more rapid appreciation than seen in other currencies. Meanwhile, it is necessary that businesses take heed of FOREX risk management, adjusting their strategies, implementing cost reductions, expanding into new markets, undertaking new product development and countering price competition, thus helping us maintain our competitiveness globally.

Thai Economy