OVERVIEW

● March’s exports fell by 4.9% YoY, after a short-lived expansion of 5.9% in the previous month, below Reuters’s consensus of -3.0%, but a tad higher than house estimate of -5.1%. On a MoM basis, it contracted by 0.5% (Feb: +13.5%). The weak export performance was predominantly underpinned by a decrease in exports to the US and regional peers, particularly for principle manufacturing goods.

● By product, steeper drops in shipments of manufacturing and minerals, as well as smaller increase in agricultural exports, have outweighed a positive turnaround in shipments of agricultural products. Exports of principle manufacturing products, in particular electronics, and minerals were the main drag to March’s export growth, contracting by 6.0% YoY (Jan: +7.5%) and 13.8% (Jan: -1.2%), subsequently knocking off 4.8 percentage points (ppt) and 0.6 ppt of the overall export growth respectively. In addition to the tech cyclical downturn, the unresolved USChina trade war has also partly contributed to the slowdown, especially for the shipments of electronics and automotive parts.

● By destination, excluding Japan, demand for Thailand’s exports has withered across the board. The moderation was led by the US (-1.4% YoY; Feb: 97.3%), followed by the ASEAN-5 (-15.6%; Feb: 2.8%) and China (- 9.0%; Feb: -1.5%).

● Meanwhile, imports remained in contraction, narrowing by 7.6% YoY, charting a softer pace of drop relative to February’s -10.0%, underperforming Reuters’s consensus and house estimate of -3.0% and -5.0%, respectively. This was mainly driven by lessened decline in imports of capital goods (-2.4%; Feb: -21.2%) as well as expansion in demand for consumer goods (4.4%; Feb: -7.4%), partially offsetting wider contraction in imports of raw materials and intermediates (-18.4%; Feb: -13.3%). As exports edged down and imports increased on a MoM basis, the trade surplus tapered to USD2.0b from USD4.0b in February.

● Overall, we maintain our view for export growth in 2019 to ease to 4.5-5.5% (2018: 6.7%) on economic slowdown in key export markets especially China and the US, tech downcycle and negative spillovers from prolonged uncertainty with regards to the trade war.

Source: Kenanga Research - 23 Apr 2019