Shippers cut growth forecast to 3% amid negative factors
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The Thai National Shippers' Council has slashed its export growth forecast for this year to 3 per cent from 4.92 per cent because of the baht's wild fluctuations and the economic slowdown of major trade partners.
Ratidanai Hoonsawat, head of the export performance index project, said yesterday that the baht’s appreciation over the last two months has driven up the price of exports, which has sharply blunted the competitiveness of Thai products, particularly agricultural products, in the global market.
Export volume in May fell precipitously by 5 per cent from the same month last year.
A clear correlation has been observed between foreign investment outflows and the baht’s deprecation after the prospects of an end to the US’ quantitative easing scheme appeared to sharpen. The 15.5-per-cent decline in foreign investment in the Stock Exchange of Thailand saw a 4.4-per-cent decline in the baht’s value.
“Normally, the baht’s depreciation is helpful for the export sector. However, the depreciation was in line with other Asean currencies. Together with the dramatically greater swing than any others, Thailand has lost competitiveness,” said Vallop Vitanakorn, vice chairman of the Federation of Thai Industries.
The economic outlook of the US is not certain. The situation in Europe will continue to be in bad shape. Despite the signs of recovery in the Japanese economy, domestic consumption there remains insipid. In China, the forecast of gross domestic product growth was trimmed.
“Chinese traders are now facing viscous financial liquidity. They need to seek non-traditional loans,” he added.
Exports to China contracted 11.5 per cent in May.
Ratidanai sees an opportunity in the Asean market, which absorbed 25 per cent of all Thai exports. However, Vallop said Thai exports to Asean were mostly agricultural or semi-finished products. The finished products of other Asean nations will compete with those of Thailand in the global market.
Vallop strongly urged the government to intervene in the forex market to ensure the baht’s stability.
Vichai Sriprasert, managing director of Riceland, said that in 2011, before the introduction of the rice-pledging scheme, rice exports hit 10.6 million tonnes worth over Bt190 billion. Last year with prices 10 per cent higher than the global market, Thailand could ship out only 7 million tonnes of rice worth Bt140 billion.
“Although the government has good intentions, it does not lead to good results in practice,” he said.
Paiboon Ponsuwanna, an adviser to the TNSC, warned of a possible increase in the cost of production after a meeting of the National Shippers’ Council in Europe. The new green freight policy that makes all manufactures declare the environmental impact of their production process will lead to a situation similar to the one after the introduction of ISO.
Shippers might also hike the surcharge for container weighing after an accident caused by a false declaration of container weight. Finally, many shippers cut their costs by slow steaming. Lowering a ship’s speed saved 80 per cent in gas costs but increased time consumption by four to seven days.
“The government should efficiently manage these issues,” he added.
