CURRENCY weakness in some of Thailand’s key developed country trading partners is clouding the outlook for exports despite some otherwise positive signs this year, said Wisit Limluecha, vice chairman of the Thai National Shippers' Council, yesterday.
Wisit said that although the country had enjoyed a rise in exports in the first five months of this year, the prices for some items – such as rubber sheets – were starting to drop. Rice prices were holding up, and exports to Asean other East Asian countries had expanded. Growth in exports to those markets would likely continue in the second half, he told a roundtable discussion on the prospects for exports and private investment in the second half. The event was hosted Krungthep Turakij, a sister publication of The Nation.
However, Wisit expressed concerns about the weakness of currencies in some of the big developed countries such as the United States and Britain. He said the baht was now too strong against these currencies, singling out the US dollar and the British pound. The trend of baht appreciation against these currencies would erode the competitiveness of Thailand’s exporters.
The council is awaiting the six-month report card on export performance to make a fuller assessment on the impact from currency trends. Wisit said he was worried that the US dollar would still be relatively weak even after the expected further rises in US interest rates. The council projected exports will expand 3.2-3.5 per cent this year.
Don Nakornthab, a senior director at the Bank of Thailand, told the forum that the central bank would seek to limit the appreciation of the baht. The currency has risen 5.4 per cent against the US dollar this year. Against its regional peers, the baht’s performance put it in the middle of the group, he said.
Don said the baht’s strength against currencies such as the US dollar and the pound had not yet hurt the economy but the impact would be felt by exporters after they exchanged these currencies into baht. Strong global demand for Thai products had contributed to the baht’s rise and this suggested that exporters had bargaining power, he said . However, he cautioned that exporters should be mindful of the currency risks, while reaffirming that the central bank would act to keep the baht from overshooting.
Don said exports last month expanded by an unexpectedly strong 13.2 per cent. They were expected to expand further in the second half after posting a growth rate of 7.2 per cent for the first five months. But he warned that the growth may not be as robust as in the first half, Foreign investors have noted that growth in Thai exports has been slowing compared with that of the country’s rivals in the region.
Wichayayuth Boonchit, a senior adviser to the National Economic and Social Development Board, said he was optimistic about the economy in the second half after gross domestic product expanded 3.3 per cent in the first quarter . However, private investment contracted 1.1 per cent, but is expected to pick up if export growth is sustained. And the global economy recovery was contributing to export growth, Wichayayuth said.
Wichayayuth said tourism would continue to be a key support for the economy, with an expected increase in the number of Chinese visitors.