Caution rules on economy despite raised forecast for export growth

Economy August 02, 2017 01:00


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THE THAI National Shippers' Council (TNSC) has scaled up its forecast for this year’s growth in exports to 5 per cent from an earlier projection of 3.5 per cent, while the country’s peak private-sector grouping is sticking with its estimate of economic growth of 3.5-4 per cent for 2017.

Despite the bullish exports view of the TNSC and the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) holding firm on its estimate for GDP expansion, concerns remain over the strengthening trend of the baht. This could affect demand for overseas shipments in the latter half of the year.

Predee Daochai, a JSCCIB member and chairman of the Thai Bankers’ Association, said the committee still has a cautious view on the country's economic growth. It sees exports rising 3.5-4.5 per cent for the full year. For the first half, exports grew 7.8 per cent.

TNSC chairman Ghanyapad Tantipipatpong said the upward revision for export growth factored in the economic recovery in Thailand’s trading partners and the increased confidence in Thai products.

“To achieve the 5 per cent growth estimate, we based it on average monthly exports of US$18.84 billion over the past six months,” said Ghanyapad, adding that the estimate also had the baht trading at 33.40-33.50 to the US dollar and global crude oil prices at US$50 a barrel. 

Exports amounted to $20.28 billion in June, up 11.7 per cent year on year. For the half year, they were $113.55 billion, a jump of 7.83 per cent year on year.

According to the Bank of Thailand's most recent survey, most business operators expect exports to continue their expansion into the third quarter of this year. The survey was conduced on 208 business operators nationwide.

The survey indicated a rise in pending orders and sustained demand for new products as a result of Internet of Things technology and this could benefit producers of electronics components, the country's key export sector.

Internet connectivity 

Ghanyapad expects export of electronics items and electrical appliances will benefit from the trend for Internet connectivity in products and will result in improved sales in the fourth quarter.

However, Preedee warned that developments in other countries could move money markets and trigger more volatility in the baht, despite the global economy’s continued expansion.

A reduction in monetary easing policies by the US Federal Reserve, the European Central Bank and the Bank of England were among potential external issues cited by Predee, who also is keeping an eye on the elections in Germany and a key meeting of China's Communist Party this year.

However, the BOT survey noted: “Most producers of Thai goods for export with rising sales usually develop their products with a higher value-added or new technology focus. These products are not price-sensitive and these producers have hardly been affected by baht appreciation.”

Domestically, private consumption was predicted to improve in the third quarter of this year in line with the country’s economic expansion, the survey said. However, risks exist with high household debt and price fluctuations for agricultural products, including rubber.

Higher prices of agricultural products have not yet been reflected clearly and broadly in the purchasing power of the agricultural sector, the survey said, noting that product quality had been affected for some commodities, such as rice, which had been exposed to high humidity from the sustained rains.

The survey forecasts sustained growth in tourism in the third quarter tourism, due mainly to the influx of Chinese tourists, while the construction sector was expected to gain from investment in the government's mega-projects - particularly for highways in the North and mass rapid transit schemes and other infrastructure in the Central region.

The survey found that small-business operators have not yet gained from the big government projects as they cannot compete under the state procurement criteria, although they pursue some subcontracting opportunities.