Thailand: Exports continue to contract in October
Exports fell 4.5% year-on-year in October, down from the 1.4% contraction in the prior month and worse than market expectations of a 3.7% drop. The fall was driven by contracting exports of motor cars, part and accessories; precious stones and jewelry; polymers of ethylene and propylene; refined fuels; and chemical products. Moreover, only five of the top 15 exports recorded growth in October. Imports, meanwhile, dropped a staggering 7.6% year-on-year in October, down from the 4.2% fall in September.
The trade surplus, consequently, narrowed to USD 0.5 billion in October from the USD 1.3 billion surplus in the prior month; however, it swung from the USD 0.2 billion deficit logged in October last year. The 12-month moving sum of the trade balance, on the other hand, rose from a USD 7.6 billion surplus in September to a USD 8.3 billion surplus in October.
Commenting on the result, Prakash Sakpal, Asia economist at ING, noted that “the accelerated trade decline in October tells us more about past history than the current trend, which already looks to have turned for the better. […]. Besides, significant current volatility and seasonality added to the noise.” Yet, the drops in export and imports are “suggesting growth headwinds remain strong in Q4”, according to the research team at Nomura.
Looking at next year, export growth should pick up momentum although this partly reflects a low base effect. Moreover, the external sector’s performance will largely depend on developments regarding the Sino-American trade war.