Recent data revealed that the Thai economy had slowed considerably in March, particularly in the export sector, which is one of the country’s key engines of growth. Despite a better-than-expected result, Thailand’s exports fell for the sixth straight month in March, with the Ministry of Commerce reporting a 4.2% year-on-year drop. While inflation rose at the slowest rate in 15 months in March due to lower energy and food prices.
On the supply side, manufacturing activity dropped by 4.6% YoY, compared to the 2.4% fall seen in February. The month saw the most decline in activity in the food and beverage, chemical, and IC & semiconductor industries.
Positively, the overall job market remains strong, with more people registered with the social security office, and the number is comparable to pre-pandemic levels.
Krungsri Capital Securities predicts that the Thai economy will continue to cool off in the next months as key economic drivers continue to weaken. Although the services industry is still booming, data shows that it is starting to approach its pre-Covid level of performance. “This suggests there is little room to improve further given the slowing global economy,” said Krungsri in the note released on Wednesday.
“It is encouraging that Thailand’s March export data were stronger than expected, but other forward-looking data such as regional exports and new export orders have yet to confirm a sustainable pattern; the strong orders might be simply advanced shipments ahead of Thailand’s New Year holidays,” the brokerage added.
Therefore, Krungsri cautions investors to remain wary of risk assets in the short term, particularly in light of remaining concerns that the U.S. may enter a recession by the end of this year or the beginning of next year.
