BANGKOK Thailand looks more likely to emerge from recession in the third quarter after exports grew at their fastest pace in five months, but analysts warned of risks from still-fragile global demand.
Headwinds from flooding on factory production and pressures from capital outflows as the Federal Reserve winds down its monetary stimulus could also restrain a strong turnaround.
"It's a surprise because global demand is not that good. I think exports for the rest of the year should not grow much although we may see orders in September or October for the New Year. Besides that, there are no clear positive factors for exports," said KGI Securities economist Pragrom Pathomboornm.
Exports in August rose 3.9 percent from a year earlier while imports fell 2.1 percent, data from the Commerce Ministry showed on Thursday. A Reuters poll had predicted an annual 0.73 percent rise in August exports and a 3.10 percent gain for imports.
Exports, equal to more than 60 percent of the economy each year, rose just 1 percent in the first eight months of 2013 from a year earlier.
Weakness in exports and slowing domestic demand pulled Thailand into a mild recession in the second quarter, as Southeast Asia's second-largest economy shrank on a quarterly basis in each of the first two quarters.
However, Thai authorities have said the economy should pull out of recession, believing shipments will rebound in the final months of the year, usually the country's export season.
Thammarat Kittisiripat, an economist at TMB Bank, was less optimistic saying the economy might see zero growth, or a small contraction, in the third quarter from the prior period.
Thailand's surprisingly strong exports add to growing evidence that Asian exporters are starting to reap gains from stronger growth in the United States, the euro zone and Japan.
Taiwan, South Korea, and Japan all posted strong gains in August exports. The Philippines saw July exports rise.
The Commerce Ministry said a recovery in the world economy, although fragile, and signs of stabilization in China's economy, had led to a rebound in exports after three months of decline.
Exports to China in August rose 3.1 percent from a year earlier, compared with July's 5.3 percent fall. Shipments to the United States rose 3.6 percent year-on-year, and were up 13.4 percent to the euro zone. But exports to Japan fell 6.0 percent.
Thai exports to its Southeast Asian neighbours were up a stronger 17.3 percent in August, from 8.6 percent in July.
With export growth of just 1 for January-August, however, the ministry's 2013 target of a 7.0-7.5 percent gain is now out of reach. It will review that forecast next month.
Srirat Rastapana, the director general of the ministry's Department of International Trade Promotion, remained positive about the outlook. "August exports showed a better trend as it's also the production season while the global economy is in recovery mode," she told a briefing.
"We will work harder with the private sector to have exports of around 20 billion baht each in the remaining months. So we will probably see growth of 4-5 percent this year."
In July, Thailand's central bank slashed its export growth projection to 4 percent from 7.5 percent. It also cut its economic growth estimate to 4.2 percent from 5.1 percent. It is expected to lower those forecasts again when it reviews them next month.
The central bank left its benchmark interest rate unchanged on August 21, saying the current level remained appropriate for the economy. It will review policy again on October 16, and most economists are of the view that it will keep rates on hold.
(Additional Reporting by Satawasin Staporncharnchai; Editing by Jacqueline Wong)