Thailand's export growth pegged to hit 8%

Mixed estimates amid weak Chinese and European outlook.

According to DBS, it is projecting YoY export growth to reach 8.0% in April, buoyed by low base effects from a year ago. 

DBS noted that at this point the outlook for exports is mixed amid lackluster Chinese and European economic growth. With the baht also having outperformed most of its peers in the region, there are also concerns tha tthe loss of competitiveness may be weighing on export-oriented industries.

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April custom trade numbers are due today and the figures will be closely watched for any signs ofimprovementin external demand. Afterlanguishing for several months, exportssurged by 15.9% MoM (4.5% YoY) in March.

However, seasonal factors are likely at play here as exports tend to do better in leveltermsin March before declining in April.

Meanwhile, import growth is projected to reach 6.1% YoY. In levelterms, imports have been elevated forthe most part ofthe lasttwelve months and arelikely to do so forthe rest ofthe year. Pro-growth policies and investment have are two key reasons why imports have held up so well.

Despite the 2.2% QoQsa contraction in sequential GDP growth,there are still many reasonsto be positive on consumption growth. Rising wages, low inflation and low interest rates are some positive factors that willsupport consumption, and subsequently, imports.

Depending on how fast the government executesthe THB 2.2trn infrastructure plan, the custom trade deficit may widen towards the end of this year on the back of an increase in capital goods import.