Thailand: Export growth slows in September amid flood effects
October 31, 2011
In September, exports expanded 18.4% over the same month last year to USD 21.3 billion. The reading represented a slowdown compared to the 28.4% increase registered in August but surprised market analysts on the upside, as they had seen exports slowing to 17.7%. The September slowdown was mainly the result of a contraction in labour intensive products, especially in shipments of machinery and cars. Export growth is likely to underperform in the coming months as many manufacturing firms had to stop production in the wake of the floods that began in July and culminated in inundations of Bangkok in October. Meanwhile, imports grew 42.6% year-on-year, slightly slower than the 45.9% expansion tallied in August. As a result, the trade surplus widened from USD 705 million in August to USD 2.4 billion in September. However, the trade surplus is likely to narrow in the months ahead as a result of higher imports of food and capital goods for reconstruction and lower exports following production shortages in October. The Commerce Ministry expects exports to contract 13% in the fourth quarter this year. In its October inflation report, the Central Bank argued that production and exports are expected to decline temporarily due to the widespread floods. Therefore the Bank now expects exports to expand 13.6% (previously: +22.4%) this year, before slowing to 4.0% in 2012.
Author: Ricardo Aceves, Senior Economist