Thailand: Exports contract in October for first time in two years
November 30, 2011
In October, exports contracted 0.1% over the same month last year to USD 17.0 billion, which contrasted the 18.4% expansion recorded in September. The reading represented the first drop since November 2009 but exceeded market expectations that had exports falling a more pronounced 1.0%. The October outturn reflected production halts at several manufacturing firms as a result of the floods. The floods began in July and culminated in Bangkok being inundated in October, resulting in a contraction of manufacturing goods (-4.3% year-on-year), particularly in shipments of electronic goods, but also of machinery and cars. Imports expanded 20.6% annually, which, nonetheless, was slower than the 42.6% expansion recorded in September. As a result the trade surplus narrowed from USD 2.4 billion in September to USD 1.0 billion in October. The trade surplus seems set to continue narrowing in the coming months as a result of higher imports of food and capital goods for reconstruction and lower exports in the wake of the manufacturing sector's slow recovery. The Commerce Ministry reckons that exports will contract 15% in the final quarter of this year, which was revised from the 13% contraction estimated in October by the Ministry. The Central Bank expects exports to expand 13.6% (previously: +22.4%) this year, before slowing to 4.0% in 2012, according to its October inflation report.
Author: Ricardo Aceves, Senior Economist