Export-contraction estimate doubled
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THE THAI NATIONAL Shippers' Council has doubled this year's export-contraction estimate to 4.2 per cent from 2 per cent to reflect the protracted global economic sluggishness, despite the steady depreciation of the baht.
This marks the steepest export decline in six years since the Hamburger Crisis of 2009, when outbound shipments nosedived 12 per cent, and the third straight year of shrinkage.
Nopporn Thepsittha, president of the council, said yesterday that exports for this year would reach only US$218 billion, much lower than last year’s $227.52 billion, which was down 0.43 per cent from the previous year.
“The continuing sluggishness of the global economy and the weak crude-oil prices, will continue to hurt exports this year. Only the US economy has shown clear signs of recovery, but economic growth in other countries have shown gloomy prospects,” he said.
Some industries, mainly electronics, have also relocated their Thai production facilities overseas.
Even though the baht is expected to continue sliding to 36 against the US dollar in this half of the year, shipments will not enjoy as strong a tailwind as expected, as other currencies are weaker. Thailand also has lower competitiveness in many industries, while other countries mainly Vietnam and the Philippines have better competitiveness.
However, the domestic drought will drive up prices of crops, such as rice, which will lead to higher export value.
In the second half, exports are expected to continue shrivelling by 3.6 per cent, following the withering of 4.84 per cent in the first half.
In the worst-case scenario, the downsizing could hit 4.7 per cent in case the global economy, particularly the EU and Chinese economies, get sicker. Assuming a second-half reduction of 4 per cent, exports would run at $18.6 billion per month on average.
Sales to most markets are expected to drop this year, except to the US, which would grow by 5 per cent. Asean is projected to decline by 0.7 per cent, China by 6.3 per cent, Japan by 8 per cent and the European Union by 9.6 per cent.
In foods, exports are expected to roll back by 1 per cent, while shipments of processed food are projected to decline by 4 per cent this year. Food exports will not suffer much, thanks to the US, which is maintaining its tax privileges for Thailand under the generalised system of preferences.
However, shipments may be impacted by the US’ retaining Thailand in Tier 3, the lowest level, of its human trafficking in persons report. Thailand might also face tougher sledding as its export rivals have joined the US’ Trans-Pacific Partnership trade bloc and should benefit from lower duties.
The EU has given an ultimatum to the Thai fishing industry to solved labour problems. This will cause a bad image for Thai products in the EU market, but should not affect exports much, as many trading partners have a good understanding of Thailand’s fishery management, he added.
