The latest international trade data released by the Ministry of Commerce on March 18, 2009, showed that exports in February 2009 experienced a surprisingly small contraction. Several factors, however – especially the low base effect of 2008 and large gold shipments – distorted the data. KASIKORN RESEARCH CENTER (KResearch) therefore holds the view that an export revival is unlikely in the near term. Here are some key points of note:
Thai exports in February 2009 totaled USD11.736 billion, down by 11.3 percent YoY. Even though the data improved over the 26.5-percent shrinkage recorded in January, this improvement was mainly due to the low base of 2008 when there were fewer business days as a result of the Chinese New Year holiday falling in February. Huge gold exports by gold traders to adjust their inventories after heavy sales of the precious metal by private owners for short gain from surges in gold prices was another factor.
Our analysis showed that exports averaged a 27.4 percent contraction – excluding gold shipments – during the first two months of this year, with the data for February contracting 24.6 percent. This was a severe contraction in continuation from the shrinkage of 30.0 percent in January. Thailand's exports of gold in February reached USD1.865 billion, or 15.9 percent of total exports – rising over the 7.4 percent and 1.9 percent in January and overall in 2008, respectively. In terms of value, exports of gold soared about 1,148 percent YoY. Key export items that continued to record marked contractions were computers/accessories and parts, automobiles/accessories and parts, integrated circuits and rubber. However, rice and jewelry were among major items with positive growth.
In the months ahead, Thailand's exports will be vulnerable to the global downturn, though they may be less affected by deviating factors. Gold shipments are likely to recede, especially since gold prices dropped from this year's high at USD1,005.4 per ounce on February 20, and retail sales have slowed. Meanwhile, the US and other major economies, especially the Eurozone or Japan, continue to weaken; their outlook for revival looks quite dim for this year.
KResearch forecasts that Thailand's exports in 2009 may drop to a range of 13.5-20.0 percent YoY. Exports are likely to continue to feel the impact of the more severe global recession than our estimates last month. Therefore, Thai exports may encounter a 20-percent contraction until late 2Q09, whereas the outlook for 2H09 will be depend on signs of global recovery.
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