JSCCIB worried about stubbornly slow economic recovery, export prospects

The Thai currency is stronger than others in the region, and the Thai Chamber of Commerce is planning to discuss the matter with the Bank of Thailand next week.
The JSCCIB consists of the TCC, the Federation of Thai Industries and the Thai Bankers’ Association.
FTI chairman Supant Mongkolsuthree said yesterday that the economic recovery was still sluggish because disbursement of the government’s investment budget was much lower than targeted, while falling oil prices had yet to mitigate against the effects on domestic consumption of declining agricultural prices.
“Disbursement of the state investment budget in December amounted to Bt17 billion, which was 8.4 per cent lower than in the same period in 2013 when the political situation was still going on. Disbursement in the first quarter [October to December] of fiscal 2015 was Bt41 billion, only 9.3 per cent [of the total budget]. This is poor performance given that the target was 29 per cent in the first quarter,” he said.
Supant also noted that the BOT’s monthly Private Consumption Index had contracted once again in December. Sales of non-durable goods were slightly slower than in November, while the consumption of durable goods, especially private cars, did not improve. This could be attributed to the high level of household debt, at 84.7 per cent of gross domestic product as of the third quarter of last year.
Private investment has improved slightly but at a slow pace. The recoveries of exports and consumption are still gradual, and the government’s investment on infrastructure projects is at the initial stage.
The investment capital from the government stimulus package in the last three months of last year, worth around Bt360 billion, is expected to enter the system gradually by the third economic quarter of 2015.
The Manufacturing Production Index compiled by the BOT continued to contract in December, by 0.3 per cent year on year, but that was an improvement over the 3.7-per-cent contraction in November. It was also in line with the improvement of the FTI’s Thai Industries Sentiment Index, which increased on the increases in orders, production and sales during the New Year period.
The tourism sector has definitely improved faster than other sectors, Supant said. The number of visitors in December hit 2.8 million, ending 2014 with 24.8 million in total. The largest contribution to the tourism recovery was Asia, especially China and Malaysia, while the number of tourists from Europe, especially Russia, declined.
As for the export sector, the FTI and the JSCCIB have maintained their prediction that shipments will expand by 3.5 per cent this year. This optimism is based on improvements in December and the fourth quarter overall despite the current-exchange rate disadvantage.
Exports expanded by 1.9 per cent year on year in December, which contributed to the fourth-quarter export growth of 1.7 per cent, the first expansion in seven quarters.
TCC chairman Isara Vongkusolkit said the country had recently lost its competitive edge in exports since the baht had depreciated less than other currencies against the US dollar, and other countries such as Brazil, Malaysia and Indonesia were reaping their currency advantage.
“There is no other currency in the region that is stronger than the baht when compared with the US dollar and our competitiveness in foreign exchange has gone down,” he said. “For example, Brazil is able to export its sugar at a lower price, and this has pulled the market price of sugar down. That means Thailand has to lower its price to be competitive, but we are also losing out on our profit.
He added that Thai exports to the euro zone had also declined because the Kingdom has lost its tariff privileges under the Generalised System of Preferences.
Isara said the BOT has to do something about the currency situation. He said the TCC, and possibly the whole JSCCIB, will meet with the central bank on February 11 to discuss ways that the BOT could ease the situation.