● Exports recovery resumed in November (-3.6% YoY; consensus: -3.2%; Oct: -6.7%), marking the smallest contraction in seven months.

● By product, the better performance was observed across all segments, led by shipments of manufacturing and agricultural goods

- Manufacturing (-2.9%; Oct: -4.7%): slowest decline in seven months underpinned by a rebound in automobile exports (1.6%; Oct: -11.8%) on the back of supportive fiscal measures globally.

Agricultural (6.9%; Oct: -3.3%): first expansion in two months driven by a surge in shipments of rice (16.7%; Oct: -20.1%) and rubber (32.5%; Oct: 13.1%), in line with an almost six-year high world food price index (105.0 points; Oct: 101.0 points).

● By destination, improved demand growth was seen across most regional peers

- This was steered by a softer contraction in demand from the ASEAN-5 (-15.3%; Oct: -27.1%) and a positive turnaround in exports to Japan (4.7%; Oct: -5.5%).

● Imports contraction softened to an eight-month low (-1.0%; consensus: -9.0%; Oct: -14.3%)

- A broad-based improvement, steered by a surge in imports of raw materials & intermediates (5.9%; Oct: -8.1%) and a smaller drop in demand for capital goods (-2.5%; Oct: -16.3%).

● Trade surplus narrowed to a ten-month low (USD0.1b; Oct: USD2.0b), as exports fell (-2.3%), while imports expanded (8.9%) on a MoM basis.

● 2020 export growth is expected to hit the upper-half of our forecast range (-10.0% to -5.0%; YTD: -7.0%; 2019: -2.6%)

- Headwinds remain elevated, arising from the surge in COVID-19 cases overseas, fresh outbreak of COVID-19 infections amongst migrant workers working at the Samut Sakhon seafood market and continued appreciation of the Thai baht.

- Policy-wise, we expect the BoT to keep the policy rate unchanged (0.50%) in the near term, given its continued emphasis on the need to preserve the limited policy space.

Source: Kenanga Research - 24 Dec 2020