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20 May 2011

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Trade Deficit Likely in 2Q11 amid Slowing Exports (Business Brief No.3109)

Thai exports in April 2011 grew slower at 24.6 percent YoY, against the 30.9 percent growth recorded in March, as a shortage of auto parts from disaster-hit Japan contributed to a 13 percent deceleration YoY in the value of Thailand's auto exports, the first contraction in 18 months. Meanwhile, Thai imports in April exhibited a slight decline to 27.9 percent YoY. As a result, Thailand logged a trade deficit of USD797 million in April, down from the surpluses of over USD1.7 billion recorded in February and March.
KResearch expects that the ongoing impact of the triple disaster in Japan on Thai car exports may worsen in May; but will probably ease in June, allowing Thai automakers to resume regular production during the second half of 2011 (2H11). Given this, it is expected that Thailand's export growth in 2Q11 may decelerate to a range of 10-15 percent YoY, down from the 28.3 percent pace in 1Q11. Meanwhile, import growth in 2Q11 will expand by 20-25 percent, which would be close to the 25.6 percent growth recorded in 1Q11, consistent with surging demand for imports of intermediary goods, oil and capital goods. As a result, Thailand will likely record a trade deficit of over USD1.5 billion in 2Q11, versus a surplus of USD2.697 billion achieved in 1Q11.

Regarding the outlook for 2011, KResearch forecasts that Thai exports may grow in a range of 11.0-17.0 percent, against the 17.0-21.0 percent growth foreseen for imports. In any case, Thailand will continue to record a trade surplus of around USD3.4 billion for the entirety of 2011. Key factors that would shape Thai exports ahead include whether the current supply chain constraints vis-à-vis Japan will ease, as well as the directions of crude oil prices, inflation, monetary policy controls by central banks in various regions, as these factors would affect purchasing power within the economies of major trader partners.

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