Thailand exports likely to register fourth straight year of decline in 2016

Exports growth in Thailand is expected to register a fourth straight year of decline in 2016 on existing downtrend in monthly exports, except for the temporary surge during the first half of this year, which can be attributed to exports of gold.

Expect export growth is expected to come in at -1.5 percent this year, making it the fourth consecutive year of decline. On seasonally-adjusted terms, monthly exports have been going sideways since early-2015. Exports of manufactured goods are also on course to fall by another 4 percent this year. This is likely to remain a drag on the manufacturing sector, which is a key driver of overall GDP growth.

Further, on a seasonally-adjusted term, monthly imports are now trending some 35 percent lower than the start of 2013. Private sector demand is seen growing at a mere 2.5 percent annual pace, well below its medium-term potential of about 4 percent. The government is helping to pick up the slack, but even the pace of government spending is likely to moderate going forward, DBS reported.

Meanwhile, reforms to lift productivity are crucial. Anecdotal evidence of Thai companies increasing their investment overseas should be noted. Once confidence in the domestic economy improves, higher domestic investment should follow, and this would gradually cut down the C/A surplus.