Oil and gas exports dropped 22.28 percent to US$1.58 billion year-on-year (yoy) in November, but rose 14.67 percent month-on-month (mom), while non-oil and gas exports dropped 16.75 percent yoy to $9.58 billion or a 10.8 percent decline mom (October: -16.88 percent yoy).

The largest decline came from fats & animal/vegetable oils, which contracted $152.8 million mom. The largest increase was in footwear exports, which rose $65.3 million mom, while pearl fell $140.2 million mom, machine/electrical equipment decreased $120.2 million and vehicles were down $114.3 million.

Export volumes dropped, together with prices: Export volumes declined 11.72 percent yoy or fell 6.26 percent mom (October: -12.51 percent yoy) on continued lackluster demand in global markets. We think export volumes are bottoming (chart 1), as on an annualized basis the decrease moderated to -10.7 percent yoy in November (October: -12.51 percent).

Oil and gas imports dropped 52.76 percent yoy or declined by 6.95 percent mom: Lower oil and gas imports were led by decreased oil-product imports of $103.2 million mom (10.15 percent mom), as well as lower gas imports of $33.3 million mom (-17.98 percent mom), which caused a deficit of $58.6 million in the oil and gas trade balance (Oct: $377.6 million deficit). However, crude-oil imports continued to rise 2.49 percent mom while import volumes continued to increase, despite having slightly dropped to 1.1 percent yoy
(Oct: 1.4 percent yoy).

Non-oil and gas imports dropped 6.62 percent yoy but rose 5.60 percent mom: Non-oil and gas imports fell 6.62 percent yoy but rose 5.60 percent mom to $9.87 billion. Compared to October 2015, the highest improvements in non-oil and gas were jewelry/gems, which jumped $255.7 million mom, followed by machines and electrical equipment at $146 million mom, beans at $128.4 million mom, steel and iron at $82.9 million, and steel and iron products at $56.3 million.

The highest decline was in ships and floating structures, which dropped $73.9 million. In total, the trend is improving, notably for consumer goods at -5.46 percent yoy, 25.48 percent mom (Oct: -24.78 percent yoy). Raw-material imports fell 20.64 percent yoy, an increase of 3.12 percent mom (Oct: -28.66 percent yoy) and capital goods at 11.39 percent yoy, a 2.62 percent decline mom (Oct: -23.75% yoy).

November represents a month of both negative trade balance after the drop in oil prices in 2015 and the first negative non-oil and gas trade balance since April 2014 (chart 2). The reason for the trade deficit is similar to that of April 2014, when non-oil and gas imports increased significantly by 19.31 percent mom, while exports declined 7.25 percent mom, supported by a rebound in capital goods and raw materials imports. We think the biggest difference between that period and the current scenario is the low oil price (Brent oil average 2015 year-to-date: $54.5/bbl, 2014: $75.7/bbl).

Thus, we expect the deterioration in the trade balance to be limited at this oil-price level. On the growth side, we point to some reversal in the import trend (chart 3) as a sign of economic recovery, although we await December data for confirmation. The writer is an analyst at Bahana Securities

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