Ministry sticks to 1.2% export target despite dire forecasts
DESPITE many organisations projecting low export growth this year, the Commerce Ministry has maintained its target at 1.2 per cent as it expects shipments to recover in the second half on the back of a predicted rise in oil prices and a weakening in the v
The ministry said yesterday that the value of the country’s exports in May had contracted for a fifth consecutive month, falling 5.01 per cent to US$18.42 billion (Bt622 billion) – the sharpest year-on-year decline since February.
Imports last month dropped to the lowest level in five years and nine months, falling 19.97 per cent to $16.01 billion.
This left the Kingdom with a May trade surplus of $2.41 billion.
Exports in the first five months of the year contracted 4.2 per cent to $88.69 billion, while imports declined 9.39 per cent to $85.37 billion, leaving a cumulative trade surplus of $3.32 billion, the ministry reported.
“Despite the large decline in Thai shipments in May, the ministry will maintain its export-growth target at 1.2 per cent as an ambitious goal. An expected recovery in oil prices and a weakening baht should help drive shipments in the following months,” said Somkiat Triratpan, inspector-general of the ministry and director of the Policies and Trade Strategies Bureau.
Agricultural exports fell by 2.8 per cent last month, while industrial shipments dropped 4.5 per cent from the same period last year. Exports of rubber dropped 14.4 per cent in value, while food shipments declined 8.1 per cent, and sugar by 22.9 per cent.
He said shipments of industrial goods continued to fall in value largely because many key products, such as processed oil, chemical products and plastic, are related to oil prices.
Somkiat explained that exports to some countries had, however, showed some signs of recovery, thanks to a better outlook in the US, China and CLMV (Cambodia, Laos, Myanmar and Vietnam) markets, for which shipments in May rose by 0.4, 3.3 and 2.5 per cent, respectively.
However, exports to the European Union continued to decline, falling by 13.7 per cent, while those to Japan dropped 4.1 per cent from May last year.
The Commerce Ministry projects that the price of oil in the global market will increase in the final quarter, resulting in more exports and imports.
Last month, the average Dubai oil price was $63.67 per barrel, while the baht’s value averaged 33.60 against the US dollar, compared to 32.50 in April.
Somkiat said the weakening baht last month had not yet benefited Thai exporters, as they had to quote prices in advance, but a continued depreciation should help drive export growth in the next few months.
Vallop Vitanakorn, vice chairman of the Thai National Shippers Council, said that with such a decline in exports so far this year, Thailand’s full-year export value could post slightly negative growth, or at best only flat growth.
It would be too difficult to drive shipments into positive-expansion territory, since many countries still faced a slowing down in their economic growth, he warned.
Maybank Kim Eng, meanwhile, said it found it hard to believe exports would help drive the economy this year, as there were a number of uncontrollable global factors.
Electronics exports have not continued their rise, due to lower demand from China, while petroleum products and rubber shipments have slumped due to lower oil prices, it said, adding that exports to Japan and Europe had fallen due to slower economic growth in those key markets.
Export contraction of 5 per cent
While some forecasters mention the strong baht as one of the reasons for weak exports, Maybank Kim Eng’s outlook is that the unit will not be as strong later this year, due to the prospect of a US Fed rate hike.
Roong Mallikamas, senior director of the Macroeconomic and Monetary Policy Department at the Bank of Thailand, said the export contraction of 5 per cent in May was more than what the central bank had expected.
“The part that was unexpected is the slowdown in the export of automobiles, where orders from abroad have slowed as people wait for new models. While this is expected to be a short-term factor, the central bank still expects the sector to contract by 1.5 per cent this year due to the slow recovery of the global economy,” she explained.
The May contraction in imports was across nearly all sectors, but particularly in the fuel sector due to the drop in the import of crude oil, and its low price, she said.
The slow recoveries in domestic consumption and merchandise exports are part of the reason for the contraction in imports, the senior director added.
