OVERVIEW

● April’s exports improved, charting a smaller contraction of 2.6% YoY (Mar: -4.9%), slightly below Reuters’s consensus of -2.5%. On a MoM basis, it declined at the fastest pace in a year of 13.4% (Mar: -0.5%). The better export performance was predominantly underpinned by an increase in exports to the US and lesser decline in shipments to the regional peers, particularly for principle manufacturing goods.

● By product, smaller fall in manufacturing exports, as well as acceleration in shipments of minerals and agro industrial goods outweighed a moderation in shipments of agricultural products. Exports of principle manufacturing goods and minerals were the main driver to April’s exports improvement, charting a smaller decrease of 4.2% YoY (Mar: -6.0%) and an expansion of 0.8% (Mar: -13.8%), subsequently reducing its drag to the overall export growth to 3.3 percentage points (ppt) and 0.0 ppt, respectively. Agro industrial exports also picked up 3.1% (Mar: 0.3%), contributing 0.3 ppt to the overall export growth. Though exports marked an improvement from the preceding month, overall condition remained on a declining mode, owing to the unresolved US-China trade disputes and the tech cyclical downturn, which has contributed to the dismal performance in electrical and electronic goods exports.

● By destination, demand for Thailand’s exports rebounded in the US and improved across regional economies. The improvement was led by the EA-8 (i.e. ASEAN-5, HK, KR, TW) (-3.8% YoY; Mar: -15.1%), followed by the US (4.7%; Mar: -1.4%) and China (-5.0%; Mar: -9.0%).

● Meanwhile, imports narrowed its decline to 0.7% YoY (Mar: -7.6%), outperforming Reuters’s consensus of -4.6%, underpinned by expansion in demand for raw materials and intermediates (1.6%; Mar: -18.4%), capital goods (2.1%; Mar: -2.4%), and consumer goods (5.9%; Mar: 4.4%). As exports edged down and imports increased on a MoM basis, the trade balance flipped to record a deficit of USD1.5b from a surplus USD2.0b in March.

● Overall, we revise our view for export growth in 2019 lower to 1.5-2.5% from 4.5-5.5% (2018: 6.7%), taking into account the YTD export growth of -1.9% (2018: 12.0%), as well as the unfavourable progress with regards to the US-China trade negotiation. Continued economic slowdown in key export markets especially China and the US and the ongoing the tech downcycle would also weigh on exports performance for the year.

Source: Kenanga Research - 23 May 2019