Plunge likely in Q4 exports, imports: HSBC
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HSBC expects Thailand to witness a sharp contraction in both exports and imports this quarter due to the devastating floods, which have disrupted export-oriented electronics and automobile production.
“We see tremendous disruptions in the electronics and car sectors. The agricultural sector has also been affected and export value could continue to decline,” Frederic Neumann, HSBC managing director and co-head of Asian Economic Research, said yesterday.
Thailand is likely to see a 16-per-cent shrinkage in exports and an 8-per-cent contraction in imports in the final quarter, year on year, he said.
The overall economic contraction is expected to be 5 per cent in the period, he added.
Imports will likely be lower this quarter, as many Thai companies import parts to manufacture products for exports, Neumann said.
However, the import figure is not likely to contract as much as that for exports, because Thailand has imported necessities such as bottled water and foods to alleviate the flood crisis.
“Industrial outputs have collapsed in October and November, and [November] will likely see a decline in the country’s economic output,” he said.
HSBC has slashed its estimate for the Kingdom’s 2011 economic growth to 1.7 per cent from the previous estimate of 3.9 per cent, due to the worst floods in decades. The market consensus is for growth of 2.6 per cent.
However, the global economy remains more challenging, with a disappointing US economic recovery and high risk of a European recession, Neumann said.
“We expect Thai GDP [gross domestic product] growth of 1.7 per cent in 2011, but improving to 4.5 per cent in 2012,” he said.
Export growth is forecast at 12 per cent this year, and 9.5 per cent next year, while imports could rise 17.9 per cent this year and 9.8 per cent in 2012.
The country could be less dependent on exports in the next two to three quarters, and will likely depend largely on domestic demand, which could rise after the floods, Neumann said.
He said the resilient tourism sector and government spending should help the country to recover in the first quarter of next year, adding, “A 1-percentage-point increase in government expenditure leads to a boost of 0.2 percentage point in real GDP quarter on quarter, later.”
The executive said there was some room for the government to increase spending, as the level of public debt is not high when compared to that in other countries.
Meanwhile, Neumann expects the Monetary Policy Committee to cut the policy interest rate by 25 basis points to 3.25 per cent tomorrow to support economic recovery after the floods.
