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26 Oct 2020

Econ Digest

Global demand has rebounded from the previous month, supporting Thai exports in September to shrink at a slower pace of 3.9%YoY

Thai exports in September 2020 stood at USD19.6213 billion, or a contraction of 3.9%YoY, amid a rise in global demand compared to the previous month. Thai exports over the first nine months shrank 7.3%YoY, driven by the exports of electronic products and electrical appliances that grew 11.6% after four consecutive months of contraction (the exports of electrical appliances alone grew at an accelerating rate of 8.3%). Working from home is a factor that spurred an increase in demand for such products worldwide. Moreover, electronic parts were exported at a faster rate amid concern about the tensions between China and the United States over trade and technology.

 

In addition, agricultural exports made a turnaround in growth, especially cassava-based products, as well as fruits and vegetables. At the same time, food products such as canned tuna, chilled and frozen pork, beverages and pet food, as well as products related to infection prevention and handling of the pandemic such as rubber gloves, were able to maintain consistent growth. The products that suffered a decline in exports for September 2020 came from product groups like cars, machines, refined oil, rubber, rice and granulated sugar. Meanwhile, gold exports for September 2020 showed a regressive trend with a 9.2% contraction, due to the declining gold prices after a massive expansion in the month before.

 

A closer look at the Thai export market reveals that exports to the US have continuously grown for four consecutive months, just as exports to China, South Korea, Australia and certain ASEAN countries like Vietnam and Malaysia bounced back to positive territory. Conversely, exports to Japan and the European Union have fallen significantly as global demand has otherwise seen a recovery partly due to pent-up demand.

 

Since Thai exports over the first nine months contracted by a smaller degree than previously expected, KResearch has revised its forecast for Thai exports in 2020, with the contraction rate being reduced from its original projection of 12.0% to 7%. Exported goods that have performed well over the past months will tend to expand even more during the final quarter of 2020. Nonetheless, Thai exports during the remainder of 2020 will still be exposed to risks of COVID-19 resurgence – particularly in Europe, where the second wave of the outbreak may become more severe than the first one. Meanwhile, political factors like the US presidential election and the matter of Brexit will likely lead to more volatility in exchange rates and heightened pressure on Thai exports, going forward.

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