Despite flagging export data, Thai shipments are not expected to contract this year, as sustained global economic growth and exports to the US can compensate for sluggish exports to China, says Fitch Ratings.
"Total exports are not expected to turn negative this year," said Stephen Schwartz, a Hong Kong-based senior director and head of Asia-Pacific sovereign ratings at Fitch. "The momentum is weakening and there are downward risks from many countries, but the baseline outlook is reasonably strong.
"Thailand has seen exports to China turning negative in recent months, but [the country] has seen a pick up [in exports] to the US. We are seeing a short-term shift and trade diversion going on, but in general when China's growth slows, it tends to suppress exports and growth around the region."
The Sino-US trade dispute has complicated business sentiment and contributed to divergence in trade and supply chain, Mr Schwartz said.
Global economic growth is projected at 2.8% in 2019 and 2.7% in 2020, down from 3.2% in 2018, as growth momentum is suppressed by the Sino-US trade spat, according to Fitch.
Thailand's customs-cleared exports contracted by 2.6% in April, narrowing from March's 4.9% decline. Exports registered a 1.9% contraction for the four months to April.
Thai exports to China fell by 5%, while those to the US rose 4.7%.
The Thai National Shippers' Council has slashed its export forecast for the second time in a month, projecting shipments to expand by 1% instead of 3% this year. The lacklustre projection comes amid slowing global demand and mounting trade protectionism.