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25 Aug 2021

Econ Digest

Export growth hit 11-year high in July 2021… Full-year growth projected at 12.4%


       Thai exports maintained strong growth in July 2021 at 20.27%YoY, the highest in 11 years and above the market forecast of 19.7%YoY. Export growth during the first seven months of 2021 was 16.2%, in line with other countries in the region, but at a level still lower than other countries, which grew by more than 20%. Excluding oil-related products, gold, weaponry and military supplies, Thai exports in the first seven months of 2021 expanded by 21.47%, clearly reflecting the growth of the real economy. Economic activity in many of Thailand's major trading partners has returned to normal as a result of accelerated vaccination, driving strong growth in Thai exports in most markets in July, especially to the United States (+22.2%) and the European Union (+20.4%). In the Asian markets, Thai exports to China and Japan grew by 41.0% and 23.3% respectively. Analysis by product category showed that the main exports continued to be related to agriculture and agro-industries, such as fresh, chilled, frozen, canned and processed fruits and vegetables. However, clusters of infections from seafood markets continued to affect exports of fresh, chilled and frozen seafood. The government has addressed the problem by implementing policies to build confidence in Thai products that are free from COVID-19. Meanwhile, exports of work-from-home related products and products related to the recovery of the manufacturing sector continued to expand.

       For the remainder of 2021, the export sector, as the main economic driver, will encounter additional risks. Externally, outbreaks of the COVID-19 Delta variant have started to intensify in many countries. Meanwhile, Thailand’s manufacturing sector is also struggling with viral outbreaks in factories, mainly in 5 key industries, namely food, electronics, clothing, metals and plastics. If the outbreak still cannot be controlled, it may cause the shutdown of factories and affect production chains, which in turn would affect the Thai export sector. However, the pilot Factory Sandbox program should help curb the spread of the virus to some extent. On the other hand, the global economic recovery, especially in the United States and Europe, coupled with the weakening Thai Baht, should still enable Thai exports to achieve high growth over the remainder of 2021, so KResearch has revised its forecast for Thai export growth in 2021 from 11.5% to 12.4%YoY.

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Econ Digest