The ASEAN member states have faced drastic economic deceleration since 4Q08 following the global recession, particularly those that depend highly on exports, i.e., Singapore, Malaysia and Thailand, that have faced economic contractions of 10.1, 6.2 and 7.1 percent, respectively. As Indonesia and Philippines depend less on exports, they have been less affected and their economies in 1Q09 actually grew 4.4 and 0.4 percent, respectively. The Vietnamese economy also expanded, but at a slower pace of only 3.1 percent in 1Q09, and 4.4 percent in 2Q09.
When the ASEAN economy fell into sluggishness, it resulted in the top ranked export market for Thailand (with the proportion of around 20.5 percent) to contract 32.3 percent in 1H09 YoY. However, KASIKORN RESEARCH CENTER (KResearch) expects that Thailand's exports to ASEAN in 2H09 may contract less in a range of 5-10 percent, against the contraction of 32 percent in 1H09, and we may even see growth in the last 2 months of this year due to the low base effect of the last 2 months of 2008.
There is some positive economic signs in the top four trade partners for ASEAN, i.e., the USA, EU, Japan and China, which are benefiting from their economic stimulus measures, including fiscal injections to spur their economies and the use of accommodative monetary policy since the end of 2008, leading to the projection that ASEAN's exports to these four markets will improve. Nonetheless, consumption in the USA, EU and Japan will likely be sluggish over the remainder of 2009; though there have been some signs of recovery, unemployment remains high, and a decrease has been noted in the household sector's expenditures. As a result, ASEAN's exports to those countries may be slow to return to normalcy.
However, they do look to trend better over the remainder of this year (versus the deep contraction in 1H09) due to the liquidity injections into the economies of many countries that helped spur the industrial sector's production here moderately. Exports to China are also expected to improve due to their domestic consumption patterns and investment stimuli, which might lead to an increase in demand for raw materials imported from ASEAN, as well as for intermediate and capital goods.
ASEAN economies in 2H09 will likely improve in line with export sector growth. Thus, demand for imported Thai products will likely increase. At present, ASEAN economies have begun to signal some rebound. Singapore experienced its best economic growth so far this year in 2Q09, QoQ. Meanwhile, the Indonesian and Vietnamese economies that posted growth in 1Q09 are also expected to show continuous improvement throughout this year.
In addition, major Thai exports to ASEAN signaled a satisfactory growth in 2Q09. Hence, those items – computers, accessories and parts, cars/accessories and parts, rubber, integrated circuits, chemical products, plastic products and iron will all likely improve over the remainder of this year.
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