Exports are expected to continue improving, following the return to growth in December, the first uptick in 10 months, supported by higher demand from trading partners and better global trade sentiment, says the Bank of Thailand.
In December, the value of merchandise exports grew by 4.6% year-on-year. For the fourth quarter of 2020, exports contracted by 1.5% year-on-year, improving from the third quarter's 8.2% decline, said Pornpen Sodsrichai, senior director of the central bank's economic analysis office.
Exports improved in most categories, in line with trading partners' demand and the recovery in the global electronics cycle.
This recovery led to Thailand's electronics exports expanding substantially, said Ms Pornpen.
Social distancing and work-from-home measures worldwide during the prolonged pandemic also supported an expansion of electronic goods exports, she said.
"Thai exports in almost all categories expanded for the first time in 10 months in December," said Ms Pornpen.
"Several export goods expanded either at the same or higher rates than the pre-Covid-19 period."
The recent inauguration of US president Joe Biden is expected to lead to improved global trade sentiment, she said.
US foreign policy anticipated under the Biden administration will also help lower trade tensions between the US and China, said Ms Pornpen.
In addition, the massive budget and scale of the US fiscal stimulus package will support global trade improving, she said.
Thailand should upgrade its standards for both manufacturing and the quality of exported goods to meet higher global demand for certain trends, said Ms Pornpen.
Thailand should also balance its relations between the US and China to maintain supply chains and access to export destinations, in addition to pursuing international trade negotiations, she said.
Though economic activities in the fourth quarter of 2020 improved, the recovery remained uneven.
Private consumption indicators expanded thanks to a gradual recovery in household purchasing power, supported by government stimulus measures and additional long holidays.
However, the new Covid-19 outbreak that emerged at the end of December has started to affect some economic activities, according to the central bank.
The latest outbreak has begun to impact travel and consumer confidence, said the bank.
The Bank of Thailand is waiting for economic data from the National Economic and Social Development Council before any revision to its economic growth forecasts.
The central bank forecasts the Thai economy to contract by 6.6% in 2020, then returning to 3.2% growth this year.
Based on the central bank's economic survey during the first two weeks of this month, any improvement in economic activities will be delayed for a few months because of the new infections.