Saha chief sees export contraction, urges weaker baht

Boonsithi Chokwatana urged the government to have a policy for the baht’s depreciation to support troubled exporters and small and medium-sized enterprises.

He anticipates an economic slowdown next year, due largely to an expected contraction in the Kingdom’s exports. This year’s export growth, meanwhile, is forecast to be completely flat.

Moreover, there remains no sign of any positive factors such as an economic stimulus, he said. The European economy is still shrinking, the United States and Japan have not yet staged full recoveries, and China remains steady, on top of which Thailand’s political situation has not yet eased, he said. 

Boonsithi added that while the Bt2-trillion transportation infrastructure project could drive some economic growth next year, it may not be a key factor.

If the government wants the economy to make a recovery in 2014, the baht needs to depreciate for the sake of exports, as well as acting as a buffer against goods coming into the country that could affect Thai producers, said the Saha chief.The latter part of this year remains unsatisfactory with the spectre of the first recession since the Asian financial crisis in 1997, he said.

“At this time, local purchasing power has sharply receded [to an extent] that we have not seen since the ‘Tom Yum Kung’ crisis. Next year, if the economy has not improved, there could be the chance of a [similar] crisis. If this occurs, businesses will be hurt more, as the state of smaller operators will worsen,” he warned.

The Thai political situation will need to be steady next year, but no measures have been seen to push economic growth to 3-4 per cent, as the government expects to achieve, he said. 

The baht’s appreciation earlier this year had resulted in big brands from other countries hitting the Thai market, affecting SMEs and Saha Group’s products. Bangkok Nylon’s shut-down came after the baht had strengthened to 28-29 per US dollar, he added.

“Those who oversee the economic-related ministries have to look at foreign brands’ entry and not look at only foreign investment figures,” he said.

This year, if the baht stayed at the current level – 31.74 per dollar on Wednesday – that could benefit the Thai economy, but may not help reverse the previous situation when the baht strengthened, said Boonsithi.