Aid domestic consumption, govt told

The value of exports in July fell by 3.6 per cent year on year to US$18.22 billion, blamed on the continuing decline in oil and gold prices, the Commerce Ministry reported yesterday.

However, exports in baht terms were up for the first time this year – by 0.1 per cent to Bt609.13 billion – thanks to the weakening baht, said Somkiat Triratpan, director of the ministry’s Trade Policies and Strategies Bureau. FTI chairman Supant Mongkolsuthree said he was not worried about the seven-month losing streak in exports as it would be too hard and take too much time to reverse the slide, since much of it depends on the world economy.

That means the domestic economy is playing a more important role and the government should concentrate on business at home.

"People’s incomes have been thinning, so the government has to find ways to increase their earnings. We should not worry too much about exports, as our financial stability including international reserves along with current and trade accounts are still strong.

"We have to help low-income earners and SMEs first, as this will increase consumption activities, the confidence of the private sector. More will invest, people will make more money and GDP expansion will eventually be better," he said after a seminar arranged by the Joint Standing Committee on Commerce, Industry and Banking.

The July export figure will not prompt the JSCCIB to change its growth forecast for this year’s gross domestic product, which stands at 3 per cent, he said.

Imports declined by 12.7%

Vallop Vitanakorn, vice chairman of the Thai National Shippers’ Council, said the seven straight months of retrenchment in the export sector was expected, but the depth of the dive at 3.6 per cent was more than the TNSC’s prediction of 2.5 per cent for July.

"What I’m worried about is the expected contractions in September and October, which could reach 7-8 per cent for seasonal reasons and the continuous slowdown in the global economy, which has led to weak and stagnant orders," he said.

"The export contraction of 4.5 per cent, the slowdown in tourism from the bomb blast and the weaker outlook for China’s economy will take its toll on Thailand’s GDP expansion.

"Institutions will probably have to rethink their GDP [growth] outlooks for this year once again and it might be lower than the 3 per cent that the JSCCIB expects," he said.

According to the Commerce Ministry, imports last month also declined by 12.7 per cent to $17.45 billion, because of falling fuel imports, while the country took delivery of aircraft worth more than $700 million in the same month last year. This year, imports of aircraft were down to only $200 million compared with the same period last year.

However, the ministry sees imports still growing strongly if fuel and capital goods are excluded, as imports of raw and semi-raw materials have still increased to support production. Last month, Thailand locked in a trade surplus of $770 million.

In the first seven months of this year, shipments abroad, at $125.07 billion, were off 4.7 per cent from last year, while imports shrank 8.6 per cent to $120.83 billion, leaving the country enjoying a trade surplus of $4.24 billion.

With positive portents of declining export contractions, the ministry expects Thai shipments will not plunge perilously this year. It has retained its export target for this year at a reduction of 3 per cent to $220 billion.

Somkiat said that since many countries have turned to adopting monetary measures to weaken their currencies, Thailand was facing tough competition in global trading.

Currencies that have been plummeting against the US dollar include the Japanese yen by 14.8 per cent, the euro by 13 per cent and the Malaysian ringgit by 33.1 per cent. Compared with the same period, the baht has retreated 11 per cent against the greenback.

Excluding fuel and gold, exports last month dropped by only 2.6 per cent. Some products picked up more overseas sales last month, reflecting recovering demand in some markets, mainly the US, Japan and neighbouring countries in Asean.