Amid a vague outlook for recovery of the global economy and the stronger baht, the Thai National Shippers Council (TNSC) has lowered its export-growth target for the second time this year to only 1.6 per cent, from previous projections at 3 and 5 per cent
Meanwhile, the Bank of Thailand now also expects export growth be lower than its previous prediction of 3 per cent because of falling prices of agricultural products and some oil-refinery maintenance.
These downward revisions are in line with those of other economic forecast agencies, such as the University of the Thai Chamber of Commerce, which projects export growth of only 1.8 per cent. Only the Commerce Ministry has maintained its annualised target of 3.5-per-cent expansion.
"Thai shipments are resigned to low growth because many negative factors are dulling export competitiveness. Gloomy global economic expansion, the slowing growth of China, and the baht’s appreciation will hinder Thailand’s shipments this year," said TNSC chairman Nopporn Thepsithar.
Accelerated shipments to the European Union in the remaining months and strong growth of cross-border trade will help drive exports this year.
Thailand is scheduled to lose its tariff privileges under the EU’s Generalised System of Preferences (GSP) at the end of this year. This has encouraged Thai exporters to ship their products urgently to avoid the higher tariffs, which will rise by about 5-6 per cent on average.
Don Nakornthab, the director of macroeconomic policy at the BOT, said the expected lower export growth should not have much effect on Thailand’s overall economic expansion.
He pointed out although prices of farm products had dropped this year in the world market, the volume of exports from Thailand had not decreased. The temporarily closure of oil refineries also had no impact on gross domestic product because they used 100 per cent imported content.
According to the TNSC and a study by Chulalongkorn University, exports are expected to grow by only 1.6 per cent to US$232.16 billion this year, or an increase by 10 per cent in baht terms to Bt7.67 trillion.
The 1.6-per-cent figure is based on the assumption of an average exchange rate of Bt31.5 to the US dollar, an average Dubai oil price no higher than $120 per barrel, and global GDP growth of 2.8 per cent. The US economy is forecast to grow by 2.2 per cent, the EU by 1 per cent, China 7.7 per cent, and Japan 1.3 per cent.
Ratidanai Hoonsawat, an economics lecturer at Chulalongkorn University, said the strengthening baht would hurt Thai exports this quarter. The baht is expected to average 31 against the greenback, from an average at Bt31.13 in July.
The baht has appreciated by 3.79 per cent in the past two months, against a weakening Vietnamese dong.
Under the worst-case scenario, Thai exports could actually shrink by 1 per cent this quarter because of the stronger baht. As well, exporters need to monitor closely whether the US launches new quantitative-easing measures in October, which could cause the baht to weaken again, Ratidanai said.
According to the TNSC forecast, shipments to Asean will increase slightly this year, by 0.31 per cent, to Japan by 2.54 per cent, to the US by 2.58 per cent and to the EU by 7.09 per cent. Export to China will shrink by 0.87 per cent.
To accomplish full-year growth of 1.6 per cent, average monthly expansion should not be lower than $19.5 billion.
Vallop Vitanakorn, vice chairman of the TNSC, said export growth would be stronger in the current second half of the year because exporters were hurrying to ship their products. However, this does not bode well for next year, which should see more sluggish exports to the EU after Thailand loses its GSP privileges, he said.
Broken down by industry, shipments of automobiles are expected to grow by 7 per cent this year, and electronics and electrical appliances by 3 per cent. Rice exports will surge as the government sells off its stockpiles.
However, shipment of foods, particularly frozen seafood, needs to be closely monitored because of the US State Department’s downgrade of Thailand’s labour status.Pornsilp Patchrintanakul, vice chairman of the Thai Chamber of Commerce, said exports would grow by only 2-2.5 per cent this year because of the slow economic growth of many trading partners, mainly China.