2013-02-24 15:35:46 - Fast Market Research recommends "Thailand Shipping Report Q1 2013" from Business Monitor International, now available
BMI View: Recovery Continues, But Economy Still Fragile
BMI expects Thailand's GDP to grow by 4.4% in 2013 (no change on our earlier projections), but we have lifted our estimate for growth in the year-earlier period - 2012 - to 4.3% (up from 4.0% previously). In essence, we have been impressed by greater-than-expected strength in domestic consumption and investment in the second half of 2012, but although this is encouraging, we don't think it will build muchincreased momentum in 2013. This is because Thailand is still facing strong headwinds from the global economy and there are concerns over domestic political risk factors.
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As for industry-specific factors, the main story is that port and shipping growth will
be broadly in line with the pace of GDP and foreign trade growth. We note, however, that in 2013 GDP will accelerate marginally, while foreign trade growth will slow down also marginally. Of those two opposed trends we think the slowdown in trade will have more of an impact on port activity. To that must be added a degree of weakness in intra-Asian trade (transhipment is an important business for Thailand) and specific downside capacity factors at the country's second largest facility, the Port of Bangkok.
Headline Industry Data
* Gross tonnage at Laem Chabang, the country's largest port, set to rise by 6.5% to 60.941mn tonnes in 2013 (faster than the forecast 4.4% GDP growth for the year).
* Box handling at the same port to rise 6.4% to 6.633mn twenty-foot equivalent units (TEUs).
* At the Port of Bangkok BMI projects that tonnage growth will slow to 4.1% in 2013 to 18.936mn tonnes, with container handling set to grow 2.8% to 1.448mn TEUs.
* We expect the real value of foreign trade to grow 5.4% in 2013, down from 5.6% the year before. Imports will be up by 6.4%, ahead of exports which will grow by 4.4%.
Key Industry Trends
Some Progress On Daiwei Funding But Still A Long Way To GoAfter a meeting of Thai Prime Minister Yingluck Shinawatra and Myanmar Vice-President Nyan Tun in Bangkok, it was announced that a bilateral committee was being set up with ministerial-level membership, to discuss ways and means of moving forward with plans for the joint Daiwei deep-sea port project. The overall project, including the deep sea port, an industrial zone, a gas pipeline and other road and rail infrastructure, has been valued as requiring up to US$50bn worth of investment. A small step in that direction came when it was reported that a consortium of banks led by Bangkok Bank and Siam Commercial Bank had arranged a THB10bn (US$325mn) bridging loan to keep the project running, and to tide it over until a proposed US$3.2bn loan from a Japanese bank could be disbursed.
Manufacturing Growth Is An Upside For Shipping DemandAnalysis by BMI suggests that over the medium term strong domestic demand and a robust manufacturing outlook bode well for shipping freight and logistics in the country. Thailand's imports and internal freight demand is being driven by an expanding economy fuelled by a young and growing population. Consumer demand will benefit from the country's low unemployment outlook, forecast to average just 1.7% of the population in the medium term and both consumer demand and the country's manufacturing outlook will be boosted by the country's youthful customer and employee base with over 70% of the country's population classed as active. The country's exports are being driven by Thailand's growing manufacturing sector. Textiles and footwear dominate the country's exports. The country is set to benefit substantially from the growth in intra-Asia trade, with Thailand's top five export partners all located in Asia.
Thailand On The Route Of Another Intra-Asian ServiceSouth Korean shipping company CK Line has announced that it will launch a new intra-Asia container service, reports Transport Weekly. The VTS service will connect Vietnam to major ports in the South East Asia region. It will call at Busan, Kwangyang, Hong Kong, Ho Chi Minh, Bangkok, Laem Chabang, Hong Kong, Shekou and Xiamen. CK Line will operate the service in conjunction with KMTC and the Sinokor Line. Each company will provide a vessel with a capacity of 1,100TEUs.
Key Risks to Outlook
We believe domestic political risk to our shipping forecast is rising a little. Opposition protests in November raised concerns that Thailand might slip back into the 'red shirt - yellow shirt' factional confrontations that were so disruptive in 2010. Thousands of protesters gathered in the Thai capital Bangkok on November 24 calling for Prime Minister Yingluck Shinawatra to step down and accusing the government of corruption under the direction of ousted former Prime Minister Thaksin Shinawatra. This is the first major demonstration against her administration and the ruling Puea Thai Party (PTP) since the party assumed power in 2011. However, the government survived a parliamentary no-confidence motion brought by the opposition parties at the end of the month, and the immediate crisis subsided. Yet we note that from an economic perspective, while the economy has shown resilience by shrugging off political concerns in recent years, we still see risks that another flare-up could ultimately hurt investor confidence at the margin.
A second downside risk to our Thailand ports and shipping forecast continues to come from the uncertain global economy. Thailand remains exposed to the possibility of a sharper-than-expected slowdown in China, an increasingly important trade partner. We believe that an external blow to Thailand's economy could still, in a worst-case-scenario, tip the country into a recession.
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