Overall economic indicators in Jan suggested recovery remains strong and led by external demand. Exports grew 31%YoY from strong agriculture and hi-tech exports. Tourist arrivals were 1.61mn (+27%YoY), resulting in a US$1.4bn surplus in service account, a record high. As a result, current account surplus widened to US$2bn from US$758mn in Dec. With capital inflows estimated at US$3.8bn (possible partly from Korea bond redemption), balance of payment surplus was as high as US$4.9bn.
The Supreme Court verdict to seize Bt46bn of Dr. Thaksin’s Bt76bn assets was in line with market expectations that such a move signaled compromise and will reduce political tension. Not so, in our view. While much uncertainty remains, it now seems that the opposite is more likely. We believe, the verdict will open up a floodgate of lawsuits against not only Dr.Thaksin but members of his family and former ministers as well. Thus, this is not the “compromise” that the market was expecting and tension is likely to rise in our view. Reports of bombings at some Bangkok Bank branches may, or may not, be related to this.
Exports in Jan rose 30.8%YoY, the highest growth in 18 months. Strong growth was due to a low base last year. Still, $13.7bn in exports is high vs. the pre-crisis peak of $14.2bn in Jan.08 and an average monthly level of $12.7bn in 2009. Our 10% export forecast for 2010 implies monthly export value at $14bn.
China is our largest market with a share of 11.8% of total exports. In Jan, exports to China rose 94%YoY, led by electronics and rubber. Other markets that showed strong growth were Asean, Indochina, Latin America and Eastern Europe (up 30% or more). Exports to the US and Japan were up 16%YoY and Europe was up 9%.
Agricultural exports again jumped 46%YoY (+42%YoY in Dec) from rising volume and prices. Manufactures grew 27.8%YoY from electronics, chemicals, automobiles and electrical appliances.
01/02/2010
[ECON]Thailand Economics: Capital outflow regulations eased Capital outflow regulations eased to reduce pressure on stronger baht
The Bank of Thailand today relaxed FX regulations for outbound investment both direct and portfolio, hedging transactions and fund transfers between companies and its affiliates. The announcement is not a surprise as the BoT gave advanced notice last week.
25/01/2010
[ECON]Thailand Economics: BoT not keen to raise rates just yet BoT not keen to raise rates just yet
BoT warned that it had kept policy rate abnormally low in 2009 but when it is confident of economic recovery, it will raise interest rates back to normal levels at the appropriate time. Nonetheless, we retain our out of consensus view that the BoT will be cautious and not raise rates this year. We believe that the points raised in the BoT’s latest inflation report released do not point to an imminent rate hike.
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