Thailand manufacturing forecast to post sluggish growth

The weak external demand at the same time continues to be a drag to Thai export growth.

OCBC Treasury Research noted:

The September trade data due this week is going to be an interesting set of data to take a closer look at, following the surprise rate cut by the BOT last week.

We look for some marginal improvement in Thai trade data for September, in line with some positive cues from the region (with Korea, Taiwan and China export growth figures posting some decent rebound in September), but still expect export growth at -2.3% yoy while import growth is likely to come in at -4.0% yoy.

The weak external demand continues to be a drag to Thai export growth, especially given that manufacturing sector is likely to still see sluggish growth in the month. The export growth figures will spike from October onwards, but most of this would be driven by the low base effects stemming from last year’s floods – so from a policy perspective, it wouldn’t be much of a positive push going into 2013.

While our assessment on the Thai economy remains fairly sanguine at this stage, the BOT rate cut done last week could have been spurred to prevent a negative feedback cycle from gaining momentum in the economy, especially since most domestic manufacturers have just been back to producing on full gear in Q3.

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