Exports to US to take huge hit

The University of the Thai Chamber of Commerce (UTCC) predicts Thai exports to the US will be hit dramatically next year, turning around from 5.5-per-cent growth this year to a contraction of 5.5 per cent, due mainly to the financial meltdown.

This would be the first time Thai export growth to the US has been in negative territory and would bring down the value of exports to the country from US$20.26 billion (Bt698 billion) this year to $19.1 billion.

As a result, overall exports from the Kingdom are expected to grow only 12.9 per cent to 15 per cent to between $204 billion and $211 billion next year, against a previous prediction of 13.94-16.09 per cent.

The US is Thailand's biggest export destination, accounting for 11.2 per cent of overall value.

To prepare early for the effects of the crisis, UTCC suggests the government should set up an Emergency Financial Intelligence Unit to monitor the impact of the financial mayhem closely and seek measures to prevent damaging side effects on Thai financial institutions.

The government should also promote domestic consumption and private investment to compensate for expected lost exports next year, it said.

Aat Pisanwanich, director of the university's Centre for International Trade Studies, said the US economic wreckage would have a domino effect on other regions.

"More than half of the Kingdom's gross domestic product is from exports. A drop in exports to major destinations, including the US, the EU and Japan, would definitely cause difficulty for future economic growth," he said.

Sectors that would be hardest hit by the "Hamburger Crisis" include garments, gems and jewellery, computers and parts, plastic products and foods.