Thai exporters largely upbeat about the year ahead

The International Monetary Fund forecast in its October “World Economic Outlook” that global growth would expand from 3.3 per cent last year to 3.8 per cent this year, with advanced economies expected to grow by 1.8 per cent and 2.4 per cent, respectively.
The US economy is projected by the fund to show clearer signs of recovery, from 1.8 per cent in 2014 to 2.4 per cent this year, while euro-zone countries are expected to post growth of 1.4 per cent and 1.6 per cent in the two years.
The Japanese economy, however, is forecast by the IMF to slow from 1.4-per-cent growth last year to just 0.6 per cent in 2015, as it still faces lower spending power, a weakening yen, higher value-added tax, and natural disasters.
The combined economies of emerging nations are forecast to grow from 4.8 per cent in 2014 to 5 per cent this year, with the Asean economy projected to post 5.7-per-cent expansion from 5 per cent in 2014.
In its report, the IMF expects the Russian economy to grow by 0.4 per cent, against a contraction of 0.1 per cent last year, and the Indian economy to expand strongly from 5.6 per cent to 6.6 per cent.
The Latin American economy is forecast to expand from 1.9 per cent in 2014 to 2.6 per cent this year, and Africa’s from 1.7 per cent to 2.7 per cent.
On the other hand, the IMF projects that some key markets could face slower growth this year, with China falling from 7.7 per cent in 2014 to 6.8 per cent, while Middle Eastern countries will also face tougher economic expansion because of falling oil prices.
Nuntawan Sakuntanaga, director-general of the International Trade Promotion Department, said the Commerce Ministry targeted Thai export growth of 4 per cent to US$239.43 billion (Bt7.87 trillion) for 2015.
However, with falling oil prices, the target could be missed because of slowing economic growth in some countries, although shipments should grow strongly in the Asean market under the trade liberalisation provisions of the Asean Economic Community (AEC).
The department projects total Thai export shipments worth $230.26 billion for last year, representing only a slight expansion of 0.8 per cent from the 2013 level.
Based on the department’s target for this year, shipments to Asean are expected to grow 5.9 per cent, by 1 per cent to China, by 3 per cent to the US, by 5 per cent to the European Union and Australia, and by 2 per cent to Japan and Africa.
Exports to the Middle East are forecast to increase 5 per cent, while stronger growth of 10 per cent is expected for shipments to India and Russia.
Thanavath Phonvichai, director of the Economic and Business Forecasting Centre of the University of the Thai Chamber of Commerce, predicted that Thai exports in 2015 would grow 4.1 per cent, based on the assumption of an average exchange rate of Bt33-Bt34 against the US dollar, and an average oil price of $80-$90 per barrel.
Meanwhile, forecast 2015 export growth rates differ from sector to sector.
Most sectors – including automobiles, foods, rice, processed food and shrimp, and cosmetics and healthcare products – expect to see an improved performance, while exporters of electrical and electronic appliances and garments are largely looking to flat growth.

Foods
The value of Thailand’s food exports is expected to grow by nearly 7 per cent to more than Bt1.07 trillion in 2015, as lower fuel prices reduce the costs of production and logistics, the baht weakens, and higher demand is seen in new markets, particularly Russia.
However, some worrying factors remain. These include low crop prices, the poor economy in many countries causing consumers to watch their spending, and the cancellation of tariff privileges by the EU.
 
Processed and frozen foods
Frozen-seafood exporters foresee a brighter year, with the value of shipments rising by 20 per cent to Bt130 billion.
Poj Aramwattananont, president of the Thai Frozen Foods Association, said the industry should gradually bounce back during the year as shrimp farms recover from an epidemic that began in 2012.
Of the Bt130-billion export value of frozen seafood, Bt80 billion would be from shrimp and the rest from tuna and squid.
Nevertheless, exporters have expressed concern about fishing-area restrictions imposed by Myanmar and Indonesia, though these problems should be resolved soon, he said.
He added that Thai enterprises had been struggling to add more value to their seafood products and ensure food safety, traceability and freedom from antibiotics to serve high-end markets.
If production standards are recognised as being high, Thai seafood will gain better acceptance in the world market, and the Kingdom will retain its position as the leading Asean shrimp supplier.
 
Rice
With continued high-end stocks, and anticipated lower rice production in the world market this year, Thailand is expected to ship up to 10.5 million tonnes worth more than $5 billion in the next 12 months.
The country will continue to be the world’s largest rice exporter to the world market. However, in Asean only, Thailand has already lost its leading market share to Vietnam.
Thai Rice Exporters Association president Chareon Laothamatas said that to ensure continued Asean market penetration, Thailand should not set its rice prices too high.
The end of excessive prices under the previous government’s rice-pledging scheme should ensure that Thai rice is more competitive in the Asean and global markets, he said.
Shrimp
Thai shrimp traders foresee brighter prospects for production and exports this year, as output rises following clear signs of recovery from the disease that had blighted the sector since late 2012.
However, the sector is still worried about losing import-tariff privileges for shipments to the EU, and about trade barriers to growth.
The Thai Shrimp Association projects exports rising by 20-25 per cent to between 180,000 and 200,000 tonnes worth Bt75 billion-Bt80 billion this year, from an expected level of 150,000 tonnes worth about Bt60 billion in 2014.

Garments
Clothing exporters expect relatively flat growth of 5 per cent this year, due largely to the uncertain economic outlook in some major markets, and in the EU and the US in particular, according to Thavorn Kanokvaleewong, president of the Thai Garment Manufacturers Association.
Besides deflation in EU countries and concern over the pace of recovery in the US, the forecast also takes into account the loss of EU import-duty privileges for Thai garments since early this year.
Meanwhile, some positive factors could facilitate more shipments. These include regional trade integration under the AEC and rising demand for Thai products in Japan under that country’s policy to rely less on goods imported from China and more on the benefits of the Japan-Thailand Economic Partnership Agreement, under which tariffs are waived on goods from the Kingdom.

Electronics and electrical appliances
The fact that neighbouring countries have better policies to attract foreign investment, could affect Thai export growth of electronics, electronic parts and electrical appliances in the future.
The Federation of Thai Industries’ Electrical, Electronics and Allied Industries Club predicts that shipments of electronic products and hard-disk drives will face flat growth this year, while exports of electronic circuits will grow by 2-5 per cent.
Exports of electrical appliances are expected to grow 0-5 per cent in 2015, depending on whether foreign markets shift to ordering goods from Thailand instead of China after the latter faced problems about low-quality products supplied to the US market, said the club.

Automobiles and auto parts
Following relatively low exports last year, Thailand’s automobile and parts exporters are forecasting better growth of 5 per cent this year.
There is, however, uncertainty about some auto-makers considering moving their manufacturing bases to other countries, while car imports from Europe are growing due to cheaper prices.

Gems and jewellery
The industry’s export income is expected to expand by 5 per cent to $7.51 billion this year, from about $7.1 billion in 2014.
However, the lower price of gold could affect the value of gems and jewellery, while falling fuel prices could negatively affect purchasing power in markets that are major energy suppliers, including the Middle East and Russia.
 
Furniture
Furniture-makers expect to achieve export growth of 5 per cent from last year’s level, when products worth $1.2 billion were shipped.
Stronger expansion is forecast in the Asean market, China, Japan, Russia, Africa and the EU, as Thai manufacturers have adopted creative new designs in order to increase the value of their products on the world stage.

Cosmetics and healthcare products
With the rising number of ageing people, more consciousness about health, beauty, and cosmetic and healthcare products, as well as the higher number of visitors to the Kingdom, Thai manufacturers foresee stronger export shipments this year.
Exports of cosmetics, soaps and healthcare products are projected to grow by 5 per cent, while spa-product exports are expected to expand 15 per cent following the growth of many Thai spa and healthcare businesses in Asean countries, encouraging more demand for imports from Thailand.