Thai Exports Up 26.9% On-Year in November; Central Bank Seen on Hold

Floating market in Damneom Saduak, Thailand.
Robin Smith | Iconica | Getty Images
Floating market in Damneom Saduak, Thailand.

Thai exports in November rose nearly 27 percent from a year earlier, as expected due to flooding in late 2011, and global demand remains soft, which means the country's policy rate is likely to stay low to help the export-driven economy.

Shipments increased 26.9 percent in November from a year earlier, compared with a 26.1 percent rise forecast in a Reuters poll. The big on-year increase was anticipated because there was devastating flooding in the final months of 2011 that ravaged exports and the whole Thai economy.

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For November, exports totalled $19.56 billion -- flat from October's $19.52 billion.

Because of a unusually low, flood-impacted base, exports in December will also look very strong year-on-year. The final quarter of a year, the prime shopping season, is usually the best period for Southeast Asia's second-largest economy.

Imports in November jumped 24.53 percent from a year earlier, a little more than the 23.25 percent economists projected.

Thai export are still being affected by problems in Europe and a slowdown in the U.S., Japan and China, the Commerce Ministry said in a statement. "But we want to have 5 percent growth in exports this year, we have to wait for December. It's possible that we may get big orders," Srirat Rastapana, the director general of the ministry's Department of International Trade Promotion, told a briefing.

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High on-year export numbers in the fourth quarter stem from the low base effect, and there hasn't been much improvement in recent months.

In the first 11 months of 2012, exports have been 2.32 percent from the year-before level. The ministry still expects an increase for 4.17 percent for the year.

Battered Regional Hub

Exports slumped and the economy contracted sharply in final months of 2011 as the floods battered big industrial estates. Thailand is a regional hub and export base for top global car makers and the world's number two producer of hard disk drives.

Although normal production has been restored, some firms are still running at low capacity due to weak exports. Industrial goods account for 65 percent of total exports, which are each year equal to more than 60 percent of the economy.

The Bank of Thailand said exports could pick up in the first half of 2013 as the global economy should improve.

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The central bank's monetary policy committee, which unexpectedly cut the benchmark interest rate on Oct. 17, left it unchanged at 2.75 percent on Nov. 28, citing better global economic trends.

Phacharaphot Nuntramas, senior economist at Siam Commercial Bank said he expects the central bank to cut its rate at meetings in February and April, and then hold it the rest of 2013.

But many economists expect no change in the policy rate in coming months. The next monetary policy review is on Jan. 9. The central bank forecast export growth of 4.4 percent for 2012 and 9 percent for next year.

The Commerce Ministry predict exports will rise 8-9 percent next year. Last year, shipments rose 15 percent from 2010. The ministry's customs-cleared trade data showed shipments to the European Union rose 30.9 percent in November after a 9.6 percent rise in October.

Exports to China rose 32.1 percent in November year-on-year after a fall of 7.7 percent in October while those to the United States increased 22 percent from 17 percent in October.

Shipments to countries in the Association of Southeast Asian Nations (ASEAN), whose economies have been growing, rose 18.6 percent compared with a 14 percent increase in October.