Export growth could be about 5% if baht falls to 34/$

Economy January 08, 2014 00:00

By Petchanet Pratruangkrai
The N

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But political row could ruin that: observers

Export growth this year could be anywhere from 2 to 5.6 per cent, for an average value of US$237.5 billion (Bt7.86 trillion), the Centre for International Trade Studies (CITS) at the University of the Thai Chamber of Commerce predicts.
Meanwhile, the Thai National Shippers’ Council estimates export growth of 5 per cent this year if the baht weakens to around 34 to the US dollar, council president Nopporn Tepsittha said.
Thailand’s share of global trading dropped to only 1.16 per cent in the first half of last year, from 1.24 per cent in 2012. This trend of decline is likely to continue as political conflict ruins traders’ confidence amid tougher competition, said Aat Pisanwanich, director of the CITS.
The trend is also in contrast to some other exporting countries in the region, such as Vietnam, which is projected to see shipments jump by 10 per cent this year, he said.
“Thailand could lose market share to trading rivals, particularly Asean nations, because of the political conflict, fluctuating exchange rates, and the downward trend of global inflation and economic growth,” Aat said.
While some importers could shift their orders to neighbouring countries because of their lower production costs, others may fear that political clashes here will disrupt logistics. 
Industries that are at risk from such factors are garments, rice, rubber products, wood, furniture, and frozen foods.
To boost foreign buyers’ confidence, Aat suggested that the government and relevant agencies urgently send out a clear message that the political row will not affect shipment efficiency. Otherwise, traders could lose confidence and order goods from other countries instead – and this could have medium- or even long-term ramifications on the export sector.
“Moreover, some foreign interests are hesitant to expand existing investments or start new ones in Thailand because of the political instability,” Aat said.
Phongsak Assakul, chairman of the Board of Trade of Thailand and the Thai Chamber of Commerce, said some buyers had made inquiries about possible shipment disruptions. Exporters have tried to reassure them that this will not be a problem, as Laem Chabang, the country’s major port, is not in the capital but in Chon Buri province.
According to the CITS’s analysis, exports will grow slightly this year, though the current quarter will be hit by a decline due to the political conflict and the ongoing sluggishness of the global economy.
The centre also expects that the baht this year will range between 32.07 and 34.24 against the dollar, although it could weaken to a five-year record of 35.30 this quarter because of the political chaos.