Thailand's export growth disappoints with -7.4% YoY in August

It's the lowest since late-2011.

Thailand’s export growth came in at -7.4% (YoY) in August, the lowest since late-2011, while import growth came in at -14.2% (YoY), extending losses for the 14th consecutive month.

According to a research note from DBS, that weak external demand remains a drag to export growth means that there is now risk of overall 2014 export growth slipping into the negative territory.

DBS noted that currently its forecast is for zero export growth in 2014. Certainly, the report said, this does not bode well for GDP growth prospect ahead.

Adding to the downside pressure on GDP growth is the state of domestic demand, evidenced by the poor import growth data for August.

Here’s more from DBS:

The Bank of Thailand (BOT) fully recognizes that there are plenty of downside risks on GDP growth. It has revised down its 2015 GDP growth to 4.8% from 5.5% previously.

And while it keeps 2014 GDP growth at 1.6%, the key assumption is that the government will speed up its fiscal disbursement in 4Q14.

This week, the government is expected to announce more details of its spending plan for 4Q14, which may include tapping into unused funds from the 2014 budget.

There is only so much that the government can do to boost the economy in the near-term though, if both exports and underlying private consumption remain weak.

Much excess capacity remains in the economy. The speed of the recovery in GDP growth may disappoint some in the markets.

Note that consistently poor trade data only highlights the downside risks to our GDP growth estimates, which now stand at 1.6% and 4.0% for 2014 and 2015 respectively.