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Can export reach 5% growth target?

Exports are recovering, albeit slower than what we want or what we expect. Ministry of Commerce still targets the export growth of 5%. Though comforting, the reminiscence with last year's experience can hardly be understated. But can we get there? Or will this be another year of successive downward revisions and ended up like 2013?

In 2013, the year started off bright with export growth projection of around 7% across all research houses. Though with the benefit of hindsight, we now know that Thai exports in 2013 marginally shrank at -0.3%. As I have pointed out previously, despite our finger pointing towards the sluggish global recovery, Vietnamese export expanded 16.5%, and Chinese export grew 7.8% in 2013. Hence, room to grow there was, but ability for our export to grow there wasn't.

We also know now, thanks again to the retrospection, that falling agricultural prices, early mortality syndrome (EMS) in shrimp industry, and dormant electronics and computer parts were among the real factors behind the poor performance. None of these helps explain, however, the mismatch between Thailand's export performance in 2013 and its projection last year.

Over the past two months this year, exports thinly grew at 0.2% when compared with the same periods last year, boosted by a strong growth of 2.43% in February in contrast to shrinking at -1.98% in January. For some, this brings back the specter of 2013.

For our export to achieve a 5% growth year, for the next 10 months, our exports must register its value on average of USD20.4 billion per month to compensate for the USD18.1 billion per month average we had in January and February. This is quite a steep climb.

Now, was there any point in time in which we export around USD20 billion in a month? Yes, in 2011. First in time was in March, then for a whopping stretch of 4 months from June to September for the major flood claimed its industrial victims. Since then, Thai exports struggled to reach new high again, breaking USD20billion per month only 4 times in the past 29 months, including March and August last year. Knowing this, a word of advice is in order: don't be too alarming if export growth figure in March register a negative growth. It is stacking up against the highest export value we had last year.

At this point, it's okay to sigh, but don't feel despair. The 5% target growth is hard to achieve this year, but a healthy positive growth rate of around 3-4% isn't too out of reach. Given the current political impasse, businesses have already begun turning attention to abroad to boost sales in achieve corporate targets. But to get there, related parties must not leave the burden on the shoulder of exporters alone. Current private exporters have gone ahead, despite the lack of government support, but they can only do so much, definitely not do all.

Low hanging fruits in export markets are luckily bordering us. Export to Myanmar via border grew 13.5% last year and have registered a 24% growth so far in the first two months this year. Border exports to Laos and Cambodia are also plowed ahead with 9% and 14% growth respectively in the two months. Hence the "new ASEAN" markets, including Vietnam (dubbed CLMV), defied gravity at 10.9% growth, faster than any major markets this year.

To reap better export benefits with CLMV, we realize our strategic interest and prioritize our attention accordingly. If CLMV is a growing market, how are we expanding co-operations in other areas with these economies? The caretaking government and the Ministry of Commerce have enough power for fostering stronger trade and border activities, particular for SMEs who are struggling with falling domestic demands. Yet, a full government will be needed make strike negotiation and decision difficult, hence one dimension where political conflict may weigh down export performance this year.

I cannot close this article without pointing out the obvious: the economic recoveries in the US and the EU. In previous column, I went at length in describing the solidarity of these recoveries. What I failed to articulate as clearly was that: Do not take these recoveries for granted. Both economies have now revoked our GSP (Generalized System of Preferences) benefits, extended only to lower income countries, on selected products in 2014, and on the full spectrum in 2015. So even if these two economies are growing, we may fail to catch the boat on this one.

Does political stalemate affect exports? Sure it does. It affects both current exports and the potential for export to grow in the future. But while we mutter over the difficulty this year, we still have three quarters to go. Admittedly a 5% export may be too far reaching this year, but this should in no way stop us from registering a "close-enough" growth rate. To get there, we will need the functioning branches of government officials and private sectors to work together ever more closely this year. Despite the political stalemate, as Candide famously left a wise remark, "… let's cultivate our garden."

Views expressed in this article are those of the authors and not of TMB Bank or its Executives.

Dr Benjarong Suwankiri, Head of TMB Analytics, the economic analysis unit at TMB Bank Pcl, can be reached at tmbanalytics@tmbbank.com.


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