Asian Honda Motor’s first-quarter exports soared 53 per cent year on year, thanks to the global economic recovery, said Fumihiko Ike president and CEO said yesterday.
Asian Honda is Tokyo-based parent Honda Motor’s Bangkok headquarters for Asia and Oceania.
Ike said international demand increased significantly in the quarter, which had a positive effect on Honda’s export performance from Thailand. The quarter saw exports for all three main product lines – automobiles, motorcycles and power products – reach Bt24.68 billion, up 53 per cent year on year.
“Based on this result, we are maintaining our full-target for total export value from Thailand at Bt90 billion, or a gain of 28 per cent over 2009,” he said.
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The medium-term outlook is sobering, with growth expected at 3.5 percent in 2010 and likely remaining below potential for the next three years. Because the Thai economy is largely dependent on final demand in advanced economies, a return to pre-crisis rates of economic growth (a full recovery vs. a rebound to pre-crisis levels) will require a combination of (a recovery of demand from advanced economies and a rebalancing of the sources of growth to reduce Thailand’s dependence on demand from advanced economies.
Long-term growth will require improving productivity and greater focus on distributional issues. Imbalances present before the crisis remain, but the crisis has increased the urgency of reforms to improve productivity, enhance competitiveness, and promote more equitable growth. Openness to trade and investment have been – and will continue to be – essential to Thailand’s long-term growth. However, a return to high growth will require boosting domestic consumption and developing additional sources of external demand.
Shipments to emerging East Asia already surpassed the 2008 peak level but those to EU, Japan and ASEAN are slow.
The key risk to the global recovery lies in the need to get the timing of withdrawing fiscal and monetary stimulus just right. Withdrawal of fiscal stimulus too early may lead to another negative demand shock and a negative expectations spiral, whereas withdrawing the stimulus too late may lead to high inflation, further weakening of the US dollar, and possible asset price bubbles.
The export collapse in 2009 has been the most severe in Thailand’s recent history. The magnitude of the decline has been unprecedented. Since 1957, there have been nine episodes where exports contracted for at least six consecutive months. Losses to date are more than double those in the 1997-98 Asian financial crisis and the 2001 “dot.com” bubble turmoil. Thailand’s export performance tracked developments in world merchandise trade, which dropped around four and eight percent in the 1997 and 2001 meltdowns, respectively, but 22 % so far during the current global financial crisis.
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