Why Thailand's export growth will disappoint in 2013

A measly 2% growth forecast has been penciled in.

According to DBS, Thailand's total export growth is likely to come in below 2%YoY in 2013. This pales in comparison to the 8-10% official projection at the start of the year. Yet, the sustained robust growth in automotive exports is one highly encouraging trend.

Here's more from DBS:

Including engines and parts, automotive exports reached USD 20.9bn in the Jan-Aug period, just below the USD 21.7bn recorded for electronic exports.

There is plenty of reason to expect further growth in the automotive sector. About 55% of total foreign investment approved in Jan-Sep 2013 originated from Japan. In 3Q, more than 2/3 of this has been channelled into the automotive sector.

According to the Board of Investment, major players like Honda and Toyota have increased their investment over the past couple of years. The great flood of 2011 has not scared them. The technical know-how and high productivity in this sector has sustained Thailand’s edge among its neighbours.

This is good news. Rising middle income class has led to double-digit vehicle sales growth in neighbouring countries like Indonesia and the Philippines in recent years. At the current pace, automotive is set to overtake electronics as the largest subcomponent in manufacturing exports.