Rising concern on baht as export woes continue
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THE YEAR started off on a weak footing as January registered a bigger-than-expected fall in exports of 8.9 per cent year on year, the lowest monthly reading since the 2011 floods. It outdid Tisco’s projection of a 7.5-per-cent decline and was considerab
Exports of hard-disk drives and autos stayed strong but other manufactured products deteriorated, driven by energy-related products such as crude oil, plastics and chemicals.
Exports of agricultural products improved on the back of strong gains in shipments of rice and sugar.
Shipments to most major markets worsened except for Asean 5 and China, which saw slight improvement but remained in contraction.
Growth in exports to CLMV (Cambodia, Laos, Myanmar and Vietnam), the only market that posted any expansion, saw a marked slowdown.
We believe exports will continue to shrink in the first half, since China’s Purchasing Managers Index – a leading five-month indicator for Thai exports – was still hovering under the 50-point threshold as of January.
With exports showing no improvement, the baht, which strengthened 2.7 per cent versus the US dollar since marking a low in early October – is again in focus.
The group of exporters represented by the Federation of Thai Industries is growing more sensitive to the margin-shrinking strengthening of the baht. The group said last week that it was seeking a consultation with the Bank of Thailand on a possible policy-rate cut in a bid to alleviate pressure on the currency.
We maintain our non-consensus calls for export shrinkage of 2 per cent this year and an interest-rate cut at the next Monetary Policy Committee meeting.
The Tisco Economic Strategy Unit of Tisco Financial Group contributed this article.
