Thailand's exports surprises in September with 3.2% YoY growth

It's the first positive reading since May.

Thailand's export growth came in above expectations at 3.2% (YoY) in September, its first positive reading since May.

According to a research note from DBS, however, it isn't significant enough to lift overall export growth for 2014, which we still expect to be practically zero.

DBS also noted that the bulk of the growth in the month was driven by rice shipments. Of more importance to GDP growth, electronic exports, continue to grow at about 5% pace.

At least exports are not shrinking yet again though. Otherwise, it is likely that GDP growth will come in below DBS' projected 1.6% for 2014.

Here's more from DBS:

More heartening is the import data. Import growth bounced to 14.4% (YoY) in September after the surprising slump of -14.2% in August.

On seasonally adjusted terms, the value of imports is now back to mid-2013 levels. This could be an encouraging sign that domestic consumption is finally catching up with the recovery in consumer confidence level since May.

It remains to be seen if the strong import demand in September proves to be the start of a new trend.

But in any case, even after the strong showing in September, total import growth is likely to be around -5% (YoY) this year, worse off than 2013 when it was flat.

We are still in the early phase of the recovery and it appears that the government is finally coming to terms with this.

On Tuesday, Finance Minister Sommai commented that the government is preparing a new stimulus package for 2015. GDP growth is likely to return to around 4% in 2015, from a projected 1.6% this year.

This may seem decent but it is still below the 5-5.5% potential that the economy seems capable of.