Slowdown in China slashes Thai export forecasts

Kasikorn Research Centre (KRC) has cut its export-growth target for the year from 7 per cent to 4 per cent, with exports to China expected to expand by only 1 per cent, the lowest level in four years, said Pimonwan Mahujchariyawong, deputy managing director of the Macro and Microeconomic Research Division. 

China is one of the main markets for Thai exporters, accounting for 12 per cent of all overseas shipments. However, during the first five months of the year, exports to the market grew by less than 2 per cent year on year, she said, adding that the figure over each of the past three years was about 3 per cent.

KRC will also cut its 2013 forecast for growth in Thailand’s gross domestic product from the current estimate of 4.8 per cent. The research house will officially announce the new figure soon, but GDP growth of around 4 per cent is seen as highly likely, she said.

The overall economy is facing high pressure from unrecovered exports, while the domestic economy – driven by private consumption and private investment – is losing momentum, said Pimonwan.

The level of public investment, which to date has been seen as the key driver of the economy this year, is now in doubt following this week’s court ruling that the Bt350-billion water- and flood-management projects cannot go ahead without first being subject to impact assessments.

   

Outperforming regional peers

 

She said the export performance of some other Asean economies had been poor during 2012 and early this year. 

For example, Indonesia’s exports fell 0.6 per cent last year, and Singapore’s by 0.3 per cent, while Thailand’s foreign shipments rose by 3.2 per cent. 

In January this year, Indonesia’s exports dipped by 6.4 per cent, and Singapore’s by 4.5 per cent, while the Kingdom’s shipments grew by 3.9 per cent.

Thiti Tantikulanan, executive chairman of Kasikorn Securities, added that while Thai exports had maintained some momentum, regional exports had slowed.

Kasikornbank has revised up its forecast for the baht against the US dollar this year, from 28.50 to 30.

Meanwhile, SCB Economic Intelligence Centre yesterday also revised up its forecast baht/ US dollar rate for the year, from 28.5-29.5 to 30-31.

Chief economist Sutapa Amornvivat said the house had also revised its GDP growth prediction for 2013, cutting it to 4.7 per cent from 5 per cent, and its export-growth forecast to 6.4 per cent from 7.1 per cent.

The adjustments follow Thailand’s export growth in the first five months coming in at just 1.9 per cent, as exports to China shrank due to weakened demand for intermediate goods in the manufacturing sector. Thai exports to China this year are expected to expand by 4 per cent, he said.

According to the Bank of Thailand’s “Economic and Monetary Conditions” for May, merchandise export value totalled US$19.494 billion (Bt604 billion), a contraction of 5.1 per cent year on year due to the slowdown in shipments of agricultural products, fishery goods and manufacturing products – especially hard disk drives, integrated circuits and parts – processed agricultural goods, and petroleum products.