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19 May 2016

International Economy

Pressure from China's Economic and Export Data Eases Temporarily; Recovery Remains Vague (Current Issue No. 2740 Full Ed.)

Despite a more stabilized outlook of the export sector in the first four months of 2016, China's exports continued to contract 1.8 percent YoY in April 2016. This is mainly due to weak demand from major markets like the US. Thanks to the government policy to release quantitative measures in easing bank lending regulations, expanding export credit insurance and raising tax rebates for some businesses, KResearch expects that shipments from China will accelerate for the remaining months in 2016. Nevertheless, China's 2016 overall export value will continue to shrink 5.0 percent because of sluggish global demand.
Thailand's outbound shipments to China fell 5.39 percent YoY in March, indicating that we did not benefit from the eased pressure on the Chinese export sector. Our main export items remained afflicted by low oil and other commodity prices around the beginning of the year, while hard disk drive shipments weakened continuously. Nonetheless, it is expected that our exports to the Chinese market will accelerate over the remainder of the year, as commodity prices are likely to perk up. However, KResearch expects that our overall exports to China will fall between -2.0 percent and 0.0 percent this year.

Thai exporters are recommended to adjust themselves to correspond with changing economic conditions, i.e., export products related to the service sector, which is becoming the main driver of the Chinese economy, e.g., product related to IT services, or offer products for seniors to accommodate China's changing population structure as it is entering an ageing society. For this market, health-related products have high growth potential.

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International Economy