Export forecast falls to 3% contraction

Exports are now targeted at US$220.69 billion, which would make for the third straight year of declining shipments. The ministry had been hoping for a 1.2-per-cent hop this year.

Outbound shipments are swooning even though the baht is sinking fast and the crude oil price is stuck. The ministry’s new target is based on an average exchange rate of Bt35 to the US dollar and average Dubai oil at $60 per barrel.

"Besides weak demand overseas, hampering the sector – which contributes 70 per cent of gross domestic product – there’s the fall in agricultural product prices. This year, aggregate prices are expected to slide by 10 per cent, while the price of oil, which is one of the country’s export products, has also plunged a lot this year," Somkiat Triratpan, director of the ministry’s Policies and Trade Strategies Bureau, said yesterday.

At the lower export goal, the country stands to lose about $6.82 billion from the $227.51 billion it received last year, he said.

To ensure that shipments will not fare worse than the new target, exports in the second half of the year should run at an average $19 billion a month after decreasing 4.8 per cent in the first half.

The pessimistic target reflects the realities of the slowing down of economic growth in many countries including the US, EU and Japan, which dampens import demand, and the crashing oil price, which averaged $57 per barrel in the first half of the year , down 50 per cent year on year.

Crops are fetching lower prices, down by 7 per cent for rice and 19 per cent for rubber year on year. Automobile shipments also shifted down, but expected to revive in a few months.

Commerce Minister Chatchai Sarikulya has instructed officials to accelerate export growth to high potential markets for the rest of the year. The export strategy will focus on new markets and trading partners under free-trade agreements.

The Bank of Thailand is also due to scale back its export prediction next month in line with the latest forecasts from the Commerce and Finance ministries, said Chirathep Senivongs na Ayudhya, spokesman for the central bank.

The central bank’s current view is for merchandise exports to decrease by 1.5 per cent.

"The Commerce Ministry has lowered its export prediction from an expected expansion of 1.2 per cent to a contraction of 3.0 per cent and the direction of our new projection for the whole year is expected to be revised down in agreement with the ministries’ projections," he said.

The Finance Ministry’s Fiscal Policy Office sees exports shrivelling 4 per cent this year.

"The main reasons for the revision is the slower-than-expected global economic recovery, especially in China, which has a direct impact on Thai exports along with an indirect impact from the slowdown in Asean, which also has China as one of its main export markets," he said.

A greater-than-expected slide in global commodity prices has also contributed to the contraction in export value, while economies that mainly export commodities such as the Middle East, Australia and Asean nations have been pulled down even further beside the weight from the China factor, the spokesman said.

The Thai National Shippers Council has also revised down Thai shipments to a 4.2-per-cent contraction this year.

Thanavath Phonvichai, director of the University of the Thai Chamber of Commerce’s Economic and Business Forecasting Centre, said the weakening of the baht has not done much for exports, as many negative factors have sent global trading lower, while Thai exporters already have advance orders in hand.

However, the depreciating baht will help exports in two to three months, he said.