Sluggish exports a worry

Economy April 03, 2019 01:00

By The Nation

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The global economic slowdown, the prolonged US-China trade war, lack of clarity on Britain’s exit from the EU and trade sanctions from other countries have led to Thai exports failing to achieve their target in the first quarter of the year, the Thai National Shippers’ Council (TNSC) said, while urging quick formation of the new government to set an economic stimulus package.

Kasikorn Research Centre (KResearch) yesterday revised down the country’s economic growth for 2019 to 3.7 per cent from its earlier estimate of 4 per cent, KResearch assistant managing director Nattaporn Triratanasirikul said.

TNSC chairman Ghanyapad Tantipipatpong said that given the negative factors, the council has cut its forecast for this year’s export growth to 3 per cent from the earlier estimate of 5 per cent. In the first two months of this year, Thai exports were expected to inch up 0.2 per cent year on year.

“If the Thai exports must achieve 5 per cent growth this year, exports must average US$22.8 billion per month for the remaining nine months of this year. If the growth target is 3 per cent, monthly Thai exports must be $22 billion. TNSC expects exports in March to shrink 4-5 per cent, which could lead to first-quarter contraction of 1 per cent or flat growth,” Ghanyapad said.

She said the growth figure of 8 per cent targeted by the Commerce Ministry was not possible while it would be difficult to reach the TNSC’s 5 per cent growth target.

Exports in February rose 5.9 per cent year on year to US$21.55 billion, while imports decreased 10 per cent to $17.52 billion, which generated a trade surplus of $4.03 billion in the month.

Excluding exported weapons, Thai exports in the month contracted 4.9 per cent, led by a 9 per cent shrinkage in agricultural products shipments.

TNSC has also urged speeding up of the process of government formation after the election and the need for an economic stimulus to attract foreign investment, as well continuing the Eastern Economic Corridor (EEC) Policy, the country’s infrastructure investments and free trade agreements, she said.

She said that the election campaign promise to raise the minimum daily wage to Bt400 was too-high and could reduce Thailand’s international trade competitiveness.

TNSC secretary-general Chaichan Charoensuk said that given the export contraction in the first two months, March’s exports are forecast to shrink 4-5 per cent likely due to unfavourable markets for rice, rubber, tapioca products, processed, canned, frozen seafoods excluding shrimp, and processed and frozen shrimp. Shipments of electronics products, which have contracted, are also expected to rise weakly.

KResearch’s Nattaporn added that Thailand also will be challenged by the global economic slowdown which will, in turn, affect its exports. The new government has to expedite the implementation of economic stimulus policies under the fiscal year 2019 budget, including the passing of the fiscal 2020 budget bill. If the new government can be formed by June 2019 and the economic stimulus can be implemented as expected, household consumption will be boosted by 0.2-0.4 per cent of GDP, and the outlook for the Thai economy in the second half of this year will be brighter than in the first half.

The new economic growth projection reflects an expected slowdown in Thai exports resulting from the economic downturn in Thailand’s key trade partners despite better-than-expected improvements seen in the US-China trade dispute. KResearch has also cut its export growth projection for 2019 to 3.2 per cent from 4.5 per cent, and its 2019 import growth forecast to 4.3 per cent from 5.3 per cent.

Nattaporn expects the policy rate to be kept at 1.75 per cent throughout the year. High liquidity in local commercial banks and the banks’ approach to gradually approve loans currently should not intensify the competition in the commercial banks’ interest rates. 

As for the movement of the baht, KResearch has forecast that the baht would weaken and move within the range of Bt31.20-Bt32.50 per dollar. Factors deserving close attention are domestic issues, especially, political and economic situations.