Bleak outlook for fishing and seafood sectors, exports to China
The fishing and seafood industries and businesses that export to China face risks in the remainder of this year because of the uproar over human trafficking and the economic slowdown in China, according to Kasikornbank.
Speaking at a seminar on the Thai economy to the bank’s clients, Nattariya Wittayatanaseth, market and economic research specialist, said the situation for the fishing industry could worsen due to human trafficking issues leading to US and EU considering banning seafood products from Thailand.
"The ban on fishing products could have a domino effect because of the large number of peopled employed in the fishing industry. Also, most of the businesses in this industry are small and medium businesses, so they do not have many choices to export to other countries," she said.
China’s economic slowdown will have a serious impact, as 40 per cent of Thai exports go to China and Asean. The products that will be heavily affected by the recession are fresh food, beverage, and chemical products, including cement and steel. These products are considered 50 per cent of the exports to China and Asean.
However, there are positive signs for exports by the electronic and automobile industries due to higher demand following the recovery in the US and the EU. Also, she advised investors to buy stocks in the electronic and automobile sectors.
She said that in order to drive the economy, the government should give importance to increasing competitiveness in the tourism sector.
Tourism contributed 10 per cent of gross domestic product (GDP), which is small in comparison with foreign trade that accounts for 70 per cent of GDP.
The tourism sector is able to help boost the Thai economy as there are three related industries that showed strong growth in boosting domestic consumption –transport, hotels and trading – she said.
She explained the percentage of tourism to GDP should be increased to 20 per cent in order to help the overall situation while exports are in decline.
She said that according to the bank survey, employees who have monthly income below Bt10,000 are worried over the status of their employers as the latter showed signs of uncertainty due to the economic slowdown.
The bank is worried that government spending from the current fiscal budget is still less than in previous years. So, the government should speed up its spending to support the economy. Around Bt300 billion investment projects are in the pipeline for 2015. With implementation likely in the fourth quarter, the projects are too slow to boost GDP growth.
The bank still maintains GDP forecast at 2.8 per cent this year, while the Bank of Thailand (BOT) projected GDP growth at 3.8 per cent. However, the bank believes that the BOT will revise down GDP in its economic report out on June 19.
