● Exports charted the lowest rate of decline in five months (-1.3% YoY; consensus: -2.1%; Nov: -7.4%)

- Excluding agro-industrial goods, the improvement was broad based across products and trade partners.

- 2019 (-2.7%; 2018: 6.9%): steepest drop in five years.

● By segment, the better export figure was led by manufacturing and mineral & fuel

- Manufacturing (-0.9%; Nov: -6.4%): smallest drop in 3 months underpinned by expansion in exports of electronic machines, specifically automatic data processing machines and semiconductor devices, suggesting an incipient recovery in the tech sector.

- Mineral & fuel (-3.0%; Nov: -36.0%): narrowed decline in shipments of refined fuels underpinned by stronger crude oil price.

● By destination, the improvement was steered by higher demand from the US and Japan

- Exports to the US (15.6%; Nov: -2.6%) rebounded sharply on a low base, while decline in shipments to Japan eased (-4.4%; Nov: -10.9%).

● Imports registered its largest growth in 11-months (2.5%; consensus: 2.2%; Nov: -13.8%)

- Increased growth was observed across the board, led by fuel lubricants (0.4%; Nov: -47.9%), raw materials & intermediates (0.4%; Nov: -6.1%) and capital goods (0.3%; Nov: -8.9%).

- 2019 (-4.7%; 2018: 12.0%): weakest in three years.

- Trade surplus expanded slightly to USD0.6b (Nov: USD0.5b) as imports (-2.9%) posted a larger contraction compared to exports (-2.6%) on a MoM basis.

● Exports to recover slightly in 2020 (2020F: -2.0% - +1.0%; 2019: -2.7)

- Supported by an upturn in the tech sector and lagged impact from the current cycle of monetary easing and expansionary fiscal measures adopted in multiple economies.

- Headwinds remain arising from potential re-escalation in trade tension, fragile global economic recovery, rising geopolitical unrests and further appreciation in baht amid massive current account surplus.

- We retain our expectation for the Bank of Thailand to slash the policy rate by 25 basis points to 1.00% in 1Q20 given continued weakness in recent economic indicators, amid subdued inflation and strong baht.

Source: Kenanga Research - 23 Jan 2020