Exports rise with strong rebound in August

THAILAND FOCUS | October 3, 2016

Driven by strong shipments of vehicles and parts, Thai exports turned a corner in August rising a robust 6.5 percent year on year, as KBank’s research division raised its economic growth forecast for the Kingdom this year to 3.3 percent from 3 percent.

The strong export performance defied the forecasts of 14 analysts who had been surveyed by Bloomberg news service and who had predicted a 1 percent contraction in shipments. With the World Trade Organization citing a global contraction in trade, the Thai figures were especially promising.

The total value of exports for August was $18.8 billion, or 6.5 percent higher than one year ago. The Ministry of Commerce attributed part of the impressive increase, however, to a technical issue.

“Part of the surge in vehicle exports last month was due to $370 million of shipments that the Customs Department failed to book in July because of technical issues,” said Deputy Commerce Minister Suvit Maesincee.

Nonetheless, exports of automobiles and parts were 40 percent higher than in August 2015, and the sector accounts for 12 percent of total exports. Vehicles were also a key factor in a 9 percent increase in industrial exports, but overseas sales of steel and semiconductors also made strong contributions to that total.

Other sectors also showed improvement. Certain commodities, such as fruits, processed poultry and tapioca, also registered strong growth, despite decreases for sugar, rice and rubber. Thailand, nonetheless, remains the world’s leading exporter of rice and rubber and is number two in sugar behind Brazil.

Suvit said that the “export situation is expected to improve for the rest of this year as exports of oil-related products and commodity products are likely to get better in line with recovering oil prices.”

He cautioned, however, that the global economy remains fragile and new financial measures by many countries might affect foreign exchange and oil prices, which in turn could affect Thai exports.

Thailand’s economy is still heavily dependent on exports for growth, despite attempts to rebalance the economy more towards consumption and investment.

The ministry has predicted that exports will show marginal growth of 0.3 percentfor all of 2016.

Meanwhile the research division of KBank, one of the largest commercial banks in Thailand, raised its gross domestic product growth forecast for the country for 2016 to 3.3 percent from 3 percent, slightly exceeding forecasts by the central bank and the Asian Development Bank.

KBank said strong growth of 3.4 percent in the first half propelled by tourism revenues and government spending had served to get the economy moving again. The bank called growth during the first half “impressive,” but added that domestic travel would not likely be as strong towards the end of the year, blunting further gains.