UTCC forecasts 2.8% Thai export growth

Economy January 12, 2017 01:00

By PETCHANET PRATRUANGKRAI
THE NATION

WORLD RECOVERY, HIGHER OIL AND CROP PRICES, WEAKER BAHT CITED



THAI EXPORTS are likely to expand by an estimated 2.8 per cent this year – the best performance since 2013 – due to a recovering global economy, higher oil and crop prices and the baht’s depreciation, according to the University of the Thai Chamber of Commerce.

The UTCC forecasts that overseas shipments will grow by between 1.3 per cent and 4.2 per cent to a full-year total of US$218.4 billion-$224.63 billion (Bt7.76 trillion-Bt7.98 trillion), with the most likely outcome being in the middle of the range, at 2.8-per-cent growth to $221.58 billion. 

“With stronger economic expansion, and especially strong cross-border trade, Thai shipments will witness stronger positive growth this year, from about 0.5-per-cent expansion worth $215.5 billion last year,” Aat Pisanwanich, director of the UTCC’s Centre for International Trade Studies, said yesterday.

For shipments to hit the higher end of the forecast range, at 4.2 per cent, global gross-domestic-product growth would have to be 3.6 per cent and the baht would have to weaken to 37-38 against the US dollar, while the economies of the European Union and China would need to expand by 1.7 per cent and 6.5 per cent, respectively, he said.

The most likely scenario of 2.8-per-cent export growth assumes global GDP growth of 3.4 per cent, EU economic expansion of 1.5 per cent, China growing by 6.2 per cent and an average exchange rate of Bt36-Bt37 per US dollar, he explained. 

In the worst-case scenario of exports growing by just 1.3 per cent, the global economy would expand 3.2 per cent, the EU economy by 1.3 per cent, and China’s GDP by 6 per cent this year, while the average exchange rate would be Bt35.5 to Bt36 against the greenback.

 Among the main positive factors expected to drive Thai exports this year are the weakening of the baht, crude oil averaging $50 per barrel, higher crop prices, and stronger cross-border exports, which are forecast to grow by 7.4 per cent to $20.3 billion, Aat said.

Negative factors 

However, negative factors to be aware of are a continued slowdown of economic growth in China, the stringent international-trade policy promised by US president-elect Donald Trump, uncertainty over economic growth in the EU and political change following upcoming elections in the Netherlands, France and Germany, as well as higher minimum wages leading to rising production costs in the Kingdom, he warned.

The study found that while Thai shipments to the American market should not be seriously impacted by Trump’s trade policy, and could even grow, Thai exports to China could fall as US imports from China would face higher tariffs if he introduced the trade measures he has touted in recent months.

Thailand could see a slowdown in shipments to China of machinery, hard-disk drives and electronic circuits, as well as electronic and electrical appliances, Aat said. 

Moreover, the UTCC study warned that with lower Chinese exports to the US market, more Chinese goods would flood into Thailand and elsewhere in Asean.

Meanwhile, there is still an opportunity for Thai exports to the US to grow as products such as electrical appliances, machinery and rubber are of high quality and made to international standards, Aat said.

To drive more export growth, he suggested that Thai business should focus on innovation, value-added products and high-technology production. 

As to generating more exports to the US market, he said enterprises should also be more concerned about organic products, gluten-free and non-GMO foods, and environment-friendly products.