Thailand exports surge
Thailand exports surged in November 2016, according to the Bank of Thailand’s recently released monthly report on Economic and Monetary Conditions for November. According to information made available, Thailand exports zoomed to $18.9 billion, resulting in a 10.1% increase for the month compared to a year ago after having contracted by 4.3% in October.
Trade is the pulse of the Thai economy, with exports accounting for almost 70% of the country’s economic output.
The Bank of Thailand cited the following reasons for the double digits gain in exports in November:
- Favorable base effect
- Agricultural product demand from China
- Export of high-value oil drilling equipment to Brazil
- Continued improvement in demand for some products
- Demand for petroleum-related products
A favorable base effect occurs when a low reading in the comparing period (a month ago, a year ago etc.) makes the rate of growth in the present period seem high. Hence, lower export volume a year ago would make even a small increase in export volume at present seem high due to a high growth percentage.
The Bank of Thailand noted that the increase in agricultural exports to China was due to temporary factors.
Among products which continued to witness an improvement in overseas demand were integrated circuits, solar-cell panels, printer, and compressor parts.
Imports increased as well
Imports by Thailand increased by 2.5% in November from a year ago to $16.1 billion due to an increase in demand of raw materials and intermediate goods. Demand for fuel also increased, apart from metals and electronic parts.
Implications for your investment
A sharper increase in exports as compared to imports is favorable for the trade balance. Thailand increased its trade surplus from $1.8 billion in October to $2.8 billion in November. An increase in trade surplus adds to the economic output, thus increasing the GDP (gross domestic product) of a country.
Higher exports mean better business for companies whose revenues increase. This can have a favorable impact on their stocks as well as instruments (THD) that invest in those stocks.
The November monthly report also gave updates on public spending and private consumption expenditures. Let’s look at those in the next article.