Merchandise exports to further worsen this year: BOT

If it contracted this year, the export sector will be in the negative zone for three years in a row, according to the central bank.
The central bank expects the export of merchandise to contract by 1.5 per cent, which is more than the contraction of 0.3 per cent last year. This and the slow recovery of private spending are the main reasons the BOT lowered its growth projection for gross domestic product this year from 3.8 to 3.0 per cent.
The BOT’s growth projection is in line with the National Economic Social Development Board’s projection of 3.0-3.5 per cent, and the NESDB expects the export sector to expand by only 0.2 per cent.
The Thai Chamber Commerce reported earlier that exports in the first four months of 2015 contracted by 3.99 per cent to US$70.26 billion when compared with the same period last year.
“The weaker-than-expected export growth is the main reason we have revised down our GDP [growth] projection but we expect the sector to expand by 2.5 per cent next year,” said BOT Assistant Governor Mathee Supapongse.
“Major developments contributing to the revision are the slower-than-expected global economic recovery, especially the slowdowns in China and other Asian economies,” he said.
The central bank expects the economies of the United States, the European Union, Japan, mainland China and other parts of Asia (including Singapore, Hong Kong, Malaysia, Taiwan, Indonesia, South Korea and the Philippines) to expand by 2.1, 1.3, 0.8, 6.9 and 4.0 per cent respectively this year. These figures are lower than the BOT’s March projections of 3.2, 1.1, 1.0, 7.0 and 4.3 per cent respectively.
Vallop Vitanakorn, vice chairman of the TNSC, said the shippers’ council was going to cut its export-growth prediction to almost the same level as the BOT for the same reasons.
It agreed that exports should be able to expand by around 2.5 per cent next year given the low base, the expected strengthening of the US dollar, and the recoveries of the Japanese and EU economies, which are expected to revived in the second half thanks to quantitative easing programmes. 
Meanwhile, Mathee said the effect of the drought had been incorporated in the BOT’s projection that private spending would expand by 2.7 per cent this year, an improvement over last year’s 2.0-per-cent contraction. Government spending on investment is expected to expand by 16.3 per cent, compared with negative-4.9 per cent last year, and that should be able to support the economy along with the tourism sector, as about 28.8 million inbound tourists are expected this year.
He said the central bank had yet to consider the effects of the first case of Middle East respiratory syndrome on the economy. Deputy Commerce Minister Apiradi Tantraporn said the government was closely monitoring the impact of MERS on spending and exports.
“The outbreak should not affect domestic spending and the export sector as relevant government agencies should be able to control the situation, and people’s spending power should not be affected,” she said.
The ministry has also instructed the Internal Trade Department to monitor prices of medical equipment such as sanitary masks closely, as people seek to avoid infection.
Somchai Pornrattacharoen, president of the Thai Wholesale and Retail Association, said MERS had not yet had an impact on consumers’ spending.