Recovery On Track But Global Clouds Darken Outlook

Data for September showed that the economic recovery in Thailand is on track helped by robust exports and improvements in tourism resulting in stronger services spending (see Bank of Thailand report here). But the October S&P Global PMI showed a sharp slowdown in manufacturing growth.

• The October manufacturing PMI came in at 51.6 down 4.1 points from September, as easing domestic and foreign demand weighed on output. But firms remain confident that conditions will improve. However, there was a record rise in selling prices driven by elevated input costs from higher commodity and transport prices.
• Manufacturing production in September contracted 2.3% m/m sa due to lower automobile and chemical production driven by lower foreign demand but petroleum production increased on global supply shortages.

Source: MNI - Market News/Bloomberg/S&P Global/Refinitiv

• The September trade balance returned to a surplus after two months of deficits as export growth strengthened to 8.4% y/y and import growth slowed. Increased tourism and the trade balance helped to push the current account back into surplus after 5 consecutive monthly deficits.
• Thailand continued to see strong annual export growth to the US and European Union (largest and 3^rd largest export destinations), whereas they continued to contract to China (2^nd largest). Robust exports of computers (11% of total) and telecoms equipment (9%) continued in September.

Source: MNI - Market News/Refinitiv

• In terms of domestic demand, private consumption was fairly stable in September to be up 11.3% y/y driven by improving sentiment, robust spending on durable goods and strong spending on services as tourism recovers. The pickup in employment should help spending going forward. Investment moderated but was still up 7.4% y/y.