● Exports registered a deeper contraction in October (-6.7% YoY; consensus: -6.0%; Sep: -3.9%), putting the brakes on the recovery momentum observed since July.

● By product, the weaker performance was broadly based, led by shipments of agricultural and agro industrial goods

- Agricultural (-3.3%; Sep: 9.8%): slipped back into a contraction due to a substantial slowdown in shipments of fruits (23.7%; Sep: 91.3%), specifically durian and pineapples.

- Agro industrial (-14.1%; Sep: -3.5%): fastest decline in almost eight years, attributed to a sharper fall in sugar exports (-75.0%; Sep: -59.9%) and a high base effect.

● By destination, lower demand growth was observed across most countries, excluding the euro area and HK

- This was led by a negative turnaround in exports to CN (-6.0%; Sep: 6.9%) and a faster drop in demand from the ASEAN-5 (-27.1%; Sep: -17.8%).

● Imports worsened, recording a double-digit contraction (-14.3%; consensus: -13.4%; Sep: -9.1%)

- Steeper fall in imports of capital (-16.3%; Sep: -6.7%) and consumer goods (-21.2%; Sep: -11.7%) outweighed improvement in demand for raw materials & intermediates (-8.1%; Sep: -12.6%).

● Trade surplus narrowed to a four-month low (USD2.0b; Sep: USD2.2b), as exports declined (-1.2%) faster than imports (-0.4%) on a MoM basis.

● 2020 export growth forecast range kept unchanged (-10.0% to -5.0%; YTD: -7.3%; 2019: -2.6%)

- Downside risks remain elevated, emanating mainly from the resurgence of COVID-19 cases overseas, Thai baht’s strength and intensified political turmoil which may weigh on sentiment.

- Policy-wise, despite a slightly dovish tone, we continue to expect the BoT to keep the policy rate unchanged (0.50%) at the final policy meeting in December, amid recent extension of fiscal measures, gradual reopening of Thailand’s border and limited policy space.

Source: Kenanga Research - 24 Nov 2020