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25 Aug 2020

Econ Digest

Highly risky global economy may drag Thai exports down to a contraction of 12% in 2020

Thailand’s exports during the first seven months of 2020 contracted 7.7% YoY, while the export value in July alone stood at USD18,819 million, shrinking 11.4% YoY. Excluding oil, gold and arms shipments, Thai exports, however, contracted 13.0% YoY. Gold exports reverted to growth in July in line with global gold prices, while industrial products and oil-related shipments continued to shrink. Thai exports that continued to grow from the previous month include canned tuna, pet foods, rubber gloves, chilled/frozen chicken, semiconductors, transistors, and diodes. 


Taking into account individual markets for Thai exports, the US is the only market where the value of Thai shipments grew for a second consecutive month at 17.8% YoY in July 2020, led by shipments of computers, related equipment and parts, plus rubber products, which saw a substantial increase. Meanwhile, Thai exports to China reverted to a slight contraction at 2.7% YoY in July 2020 due to the impact of a new wave of COVID-19 and flooding in China’s key manufacturing areas such as those in Wuhan. Key shipments that saw steep contractions include plastic pellets, automobiles and rubber.  


Although Thai exports in July contracted at a slower pace than those reported in the preceding two months, increased risk to the global economy from the uncontrolled Covid-19 epidemic and heightened tensions between China and the US, plus the pressure from the Baht’s appreciation have led KResearch to revise our 2020 export growth forecast downward to a contraction of 12%YoY, from the previous shrinkage of 6.1% YoY. Meanwhile, Thai imports is reported to have had a steeper contraction of 26.4%YoY in July, led by a 24.1% YoY shrinkage in raw material and intermediate product items, suggesting that overseas purchase orders for the year-end holiday season will continue to contract.

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Econ Digest