FTI cuts export growth forecast to 2%, while TISI drops amid slow orders

Meanwhile, the Thai Industries Sentiment Index (TISI) dropped in August for the first time in four months because of flooding in many areas, while domestic sales and orders of durable goods contracted when compared with July because of the slowdown in consumption.

FTI chairman Supant Mongkolsuthree said yesterday that the growth forecast had been lowered in light of several negative factors. The slow recovery of the European economy and geopolitical risks have lowered demand for imports and put upward pressure on oil prices. Demand from China has also dropped because of changes in Beijing’s economic policies. Meanwhile, oversupplies have lowered the prices of agricultural goods, especially rubber.

“Exports in the past one or two months have not got any better, and now we believe that [full-year] growth will not reach our previous projection of 3-3.5 per cent, and |the new forecast is in the region of |2 per cent,” he said.

“Car exports last month did not do so well, which dragged the projection down quite a bit. Export of electronic products has not recovered as expected because of uncertainty surrounding the global economic recovery and geopolitical risks in Europe and the Middle East, as seen in the rising price of oil, which is one of the global economic indicators,” he added.

The export value of assembled vehicles was Bt42.82 billion in August, a decrease of 11.58 per cent year on year, while the export value of car parts also dropped to Bt63.16 billion last month, a contraction of 8.72 per cent when compared with the same month last year.

However, Supant expects export growth to pick up next year as the recovery of the global economy should be more apparent, along with the increase of border trade from the launch of the Asean Economic Community. The FTI has projected export growth of 4-5 per cent next year. 

FTI members have suggested that business operators concentrate on adding value to their products to improve the prices and competitiveness of their goods ahead of the AEC. They also urged the new government to support such product transformation by providing knowledge, incentives, technology and greater access to finance for small and medium-sized enterprises.

Meanwhile the TISI, which measures the confidence of Thai industrialists, with a sample size of 1,132 operator from 42 industries, dipped from 89.7 points in July to 88.7 last month on lower domestic sales and orders in many industries, especially for durable goods such as cars, electronic products, air-conditioners, television sets, and agricultural machines.

The confidence index for the next three months was also lower than in July, dropping from 102.4 to 103.1. But the FTI chairman said he was confident that the new government’s policy to accelerate the disbursement of this year’s and next year’s state budgets should be able to increase investments and consumption through job creation. Therefore, he expects to see more confidence in industrialists when the September TISI comes out next month.

Supant also suggested the value-added-tax rate should not be increased until the economy has fully recovered. The FTI expects gross domestic product to grow by more than 4.5 per cent next year from the increase of private investments through clarity in government investment policy.