Thailand's exports are not going anywhere for now: DBS

Its 2.1% dip disappointed everyone.

According to DBS, export growth came in at a slightly disappointing -2.1% YoY in May, as compared to our and median of market forecasts of a -1% print. At the current growth rate, exports are likely to be close to flat, with our current projection pencilling in just 2% growth for the fullyear.

Here's more from DBS:

Further downside in export growth will certainly be a drag to GDP growth. Note that positive contribution from net exports is the only reason why the economy has not slipped into a technical recession as yet. Given the disappointing performance in 2Q though, it is still quite likely that the economy might have slipped into a technical recession in the period.

But we pretty much know these by now. On a closer look, not everything from the May trade data seems that bleak. With the nominal amount of exports inching closer to the USD 20bn in May, it now appears rather certain that the significant slump in April was only temporary.

Pay attention to how capacity utilization trends going forward, for it will also provide some signs of the strength in external demand. It is also interesting to look at the trade balance, which recorded a deficit of USD 0.8bn for the month (median of market consensus has called for a surplus of about USD 0.3bn).

Many tend to focus on this deficit number and forget the fact that it has been driven by a relatively strong showing in imports for the month. Indeed, sequential growth in imports came in at a 2-year high. This could well be a temporary spike. But if it were to sustain, it does provide some early signs of a
pick-up in domestic demand.