TNSC stands by forecast of 5% export growth as world GDP rises
March 06, 2014 00:00
By ERICH PARPART
THE THAI National Shippers' Council (TNSC) is standing by its prediction of 5-per-cent growth in exports this year in the belief that the world's economy will continue to improve and the baht will stay at 33-35 per US dollar.
The International Monetary Fund sees the global economy expanding by 3.7 per cent and the World Bank by 4 per cent.
There are also signs of growth in gross domestic product in main export destinations such as Asean (5.1 per cent), China (7.5 per cent), Japan (1.7 per cent), Europe (1 per cent) and the United States (2.8 per cent).
The export sector can look for an increase in demand from abroad.
“Shipments and orders from the US have been fully booked since the beginning of the year,” Paiboon Ponsuwanna, adviser to the TNSC, said yesterday.
Demand from the United States and Europe is expected to continue throughout the year.
Shipments to China and Japan may seem sluggish now but they |will bounce back next quarter, he said.
China’s expectation of 7.5-per-cent GDP growth and its plan to reform the economy are good signs for Thailand’s exporters.
Beijing plans to reduce the economy’s reliance on government investment and exports and push for domestic consumption as a way to stabilise the economy, and if |the policy is to export less and consume more, Thailand’s exports, especially food and other consumer products, should benefit, Paiboon said.
Japan’s plan to raise the consumption tax next month will undermine that country’s consumption, but since Japan just allowed the import of chicken from Thailand for the first time in 10 years, export volume to Japan should increase by next quarter.
The baht will stay on average around 34 per dollar this year mainly because of the United States’ tapering of its quantitative-easing (QE) policy and the expected consequences of the political turmoil in Thailand, the TNSC believes.
“US QE tapering will result in a weaker baht for this year, and that is another supporting factor for our 5-per-cent export growth view,” said Nopporn Thepsitthar, chairman of the TNSC.
QE tapering will result in a weaker baht because capital will flow from developing to developed countries.
The currencies of other developing countries, such as Argentina in Latin America, with less immunity because of such factors as high inflation and low reserves, have already began to weaken considerably.
Closer to home, since last year, Indonesia’s rupiah has lost 10 per cent of its value but the baht has lost only 5 per cent. According to the Bank of Thailand, the baht is currently standing at Bt32.3.
The BOT is working overtime to keep the country’s currency stable and strong but as soon as the negative effects brought on by the political turmoil, such as low domestic consumption and lack of government spending, begin to damage the economy, the baht will surely be weaker than it is now, Nopporn |said.
Vallop Vitanakorn, vice chairman of the TNSC, said the estimated contraction in Thai exports in January of 1.98 per cent to US$17.9 billion (Bt578 billion) was not caused by the political situation because the figure this year is still above the five-year January average of $16.3 billion.
The main reason exports in January were shown as lower than the same month last year is the lower-than-expected exports of automobiles, which shrank 12.4 per cent year on year. Cars accounted for 13.4 per cent of total exports.
However, there was a contradiction in the estimate because despite the volume decline of exports of cars by 6.9 per cent in January, the export value of engines and parts rose by 0.1 per cent.
For this year in volume terms, exports of automobiles are expected to increase after this quarter and grow by 10 per cent for the whole year because carmakers have maintained the target of producing 2.5 million cars this year despite lower domestic consumption. That indicates they will concentrate on exporting cars rather than selling them here.
For other products, exports of car parts should increase by 3 per cent, garments by 3 per cent and electronics 5 per cent. Sugar and rubber exports will fall because of oversupply.
Exports of frozen seafood are also expected to see a contraction because of the lower number of tourists caused by the current political situation.