Thai exports rise for second straight month in December, exports to support GDP growth in 2017

Thailand’s exports rose for the second straight month in December, ending the year on a fairly good note. Exports grew 6.2 percent year-on-year in December and brought full-year export growth to a four-year high at 0.5 percent year-on-year. This is in contrary to the negative export growth witnessed in 2015 and 2014. In the meantime, import growth expanded for its fourth straight month, rising 10.3 percent in December from a 3 percent growth seen in the prior month.

Thai trade surplus came in healthy at USD 938 million in December. Most of the gain in export has been linked to increased oil prices, while specific products such as Agricultural and Industrials also underpinned export growth.

This year, the rebound in export figure, although gradually, indicates that Thailand’s external environment might again begin underpinning overall GDP growth. Furthermore, Thai commerce ministry commented that the nation would have little negative consequences from Trump’s TPP withdrawal, given that Thailand was not a member of TPP to begin with, and the upside risk to U.S. economic growth should help Thai export numbers into 2017, noted OCBC Bank.

In all, the ministry stated that growth in exports is likely to accelerate to 2.5 percent to 3.5 percent in 2017, underpinned by increased oil prices and a relatively subdued THB. The rebound in Thai’s external environment is seen as an encouragement, given that exports contribute two-thirds to the Thai GDP. However, much of the nation’s growth fundamentals would also rely on its tourism industry, investment trends and domestic consumption.

“We do look for overall GDP growth to be marginally better compared to 2016’s numbers at around 3.3 – 3.5 percent in 2017, in line with NESDB’s projection of 3 – 4 percent. Elsewhere, with potentially higher oil prices, headline inflation is likely to pick up to 1.5 percent in 2017 as well”, said OCBC economist Barnabas Gan.