Hopes for a continued recovery of the economy were deflated as Thailand exports worsened in October. The value of goods exported from the kingdom declined by 6.7% year-on-year, accelerating downwards from September’s -3.9%.
At the same time, imports softened by 14.3% year-on-year compared to September’s less severe -9.1% year-on-year.
Consequently, Thailand’s trade surplus incrementally tightened to USD 2.0 bn in October from USD 2.2 bn the month before.
Source: Ministry of Commerce
Cars and Parts and Agriculture Exports Plunged
According to data from Bloomberg, Thailand’s exports worsened primarily because of sharp declines of -12.6% year-on-year in cars and parts and -8.8% year-on-year in agricultural products.
The global demand for cars and parts weakened along with other big-ticket items due to continued uncertainties regarding the coronavirus pandemic.
And the export of agricultural products suffered from lower production resulting from droughts. Especially the sugar production was struck hard.
On a positive note, electronic exports continued their resilience with a 5.5% growth year-on-year, in which computers and parts accelerated to +51.9% year-on-year.
But Thailand wasn’t alone in the strengthening demand for electronics. Also, South Korean trade data, often referenced as a yardstick as world trade, accelerated in October and even further in November. For example, Korea’s semiconductor exports grew by 10.4% year-on-year in October and even accelerated to 21.9% to date in November.
Exports to Asian Countries Weakened While Shipments to the US Surged
Notably, shipments from Thailand mainly fell short to ASEAN countries (-23.1% year-on-year), Japan (-5.3% year-on-year), and China (-6.1% year-on-year).
In contrast, exports to the US substantially increased by 17.5% year-on-year. And shipments to the EU declined by a small margin of 0.4% YoY, even though these countries currently experience second waves of the coronavirus. But lockdown procedures only became effective towards the end of October, so exports to the US and EU countries might take a hit in the coming months.
What’s in the Cards for the Thai Economy?
For the two remaining months of 2020, Thailand’s exports are likely to see incremental recovery instead of the rather rapid rebound of the previous months. November and December export may fall within the range we have seen in September and October.
Global demand will remain at low levels as most economies still suffer from subdued consumer confidence and ailing tourism.
Additionally, many countries, especially in the West, have just started reintroducing lockdown measures to curb rising infection rates.
So until the virus situation resolves, Thailand’s trade will be affected in line with the world economy. Hence, this may not have been the last time that Thailand Exports Worsened.