Call for BOT to ease the pain of the slowdown in the export sector

Thailand’s US$34.48 billion (Bt1.1 trillion) combined export value recorded in the first two months of 2015 represents a 4.82 per cent decrease from the same period last year while the falling oil price has contributed to a 50 per cent dropped in the agriculture value.
“Other currencies has depreciated [against the US dollar] faster than the Thai baht and we hope that the central bank could come with some measure to help the economy and the export sector, which are not doing so well at the moment,” the Federation of Thai Industries (FTI) chairman Supant Mongkolsuthree said.
The Thai Chamber of Commerce (TCC) chairman Isara Vongkusolkit said Thailand’s export sector had been hit by lower exchange rate competitiveness.
For example, he said Brazil had gained competitiveness in sugar after the value of their currency dropped by 20 per cent last year.
“The Thai economy has slow downed partly because of the slowdown in the global economy while the export sector has also been hit by the exchange rate,” he said at the Board of Investment meeting last week.
Thiti Tantikulanan, head of capital markets at Kasikorn Bank, revealed that the baht – which was trading at Bt32.534 per one US dollar on April 8 – had depreciated by 1 per cent compared to its value on April 8, 2014 because imports had declined considerably in the fourth quarter last year, which contributed to a current account surplus of $9.8 billion at the end of 2014.
Currencies in Vietnam, Taiwan, India, Korea, Singapore, Malaysia, Indonesia, Japan and Brazil have dropped by 2.5 per cent, 2.7 per cent, 3.5 per cent, 3.8 per cent, 7.9 per cent, 11.1 per cent, 13.1 per cent, 15.2 per cent and 29.7 per cent, respectively, in the same period of time while Thailand recorded a current account surplus of $3.51 billion in February 2015.
The Thai National Shippers Council cut Thailand’s export growth estimate this year from 1.5 per cent to zero expansion on March 31 due to the plunging oil price and sluggish economy.
Its president Nopphon Thepsittha said that the euro depreciation and economic slowdowns in Japan and China had also affected Thai exports along with the country’s lower competitiveness in some products.
Nopphon explained that Thailand’s export competitiveness had been hit on several fronts, including higher labour costs and raw material prices as well as trade barriers while the dollar/baht exchange rate is also hurting the competitiveness as the baht had remained stronger than the currencies in rival countries.
The BOT was one of the first institutions to say at the beginning of this year that exports will be sluggish in 2015 and last month they lowered their export prediction from 1 to 0.8 per cent last month while the FTI and TCC expects export to expand no more than 1 per cent this year.
Mathee Supapongse, BOT’s assistant governor and secretary of the Monetary Policy Committee (MPC), said the value of merchandise exports were likely to grow at a lower rate due to the weaker than expected global economy and the decrease in commodity prices in line with oil.
He also said that the MPC’s move to lower the benchmark lending rate from 2 per cent down to 1.75 per cent on March 11 “was not intended to help any sector in particular”.
The BOT’s senior director of the Macroeconomic and Monetary Policy Department, Roong Mallikamas, said the “structural problem” within the export sector and the “slowdown of demand from major trading partners” were some of the main reasons for the slowdown in exports.