Slump in exports ‘worse than expected’ amid low oil prices

This the third straight year of backsliding, but for next year, the Commerce Ministry is looking for a return to the growth path. Its 2016 forecast is for a 5-per-cent increase to $225 billion, reflecting the brighter picture for global trading, which is expected to bounce back from a shrinkage of 11.2 per cent to an expansion of 2.4 per cent.
The ministry reported that in the first 11 months of this year, shipments were off 5.5 per cent to $197.27 billion (Bt6.61 trillion), while imports declined 11.2 per cent to $187.04 billion.
In November alone, exports were down 7.4 per cent to $17.16 billion, while imports fell 9.5 per cent to $16.86 billion. Thailand locked in a trade surplus of $10.23 billion in the first 11 months, after adding $298 million last month.
“Oil and products from oil account for more than 10 per cent of total export value. Expected continuing falling oil prices will still be a risk factor for Thai exports next year,” Somkiat Triratpan, director of the Commerce Ministry’s Policies and Trade Strategies Bureau, said yesterday.
The ministry estimates that the oil price next year will continue to drop from an average of $51.60 per barrel this year to $50.40. This would hit trade to many markets that depend heavily on oil sales.
If oil prices continue to deteriorate, not only will many oil-based products be affected, but also agricultural crops, mainly rubber.
As of November, the average oil price this year was $42.32 per barrel, but in December, it weakened to $36 per barrel.
Exports of agro-industrial products have crumbled in the first 11 months by 7.2 per cent, and those from other industries by 3.7 per cent. Exports to most markets were down, except to Cambodia, Laos, Myanmar, Vietnam (CLMV), Australia, Latin America and the United States. Exports increased by 7.8 per cent to CLMV, 6 per cent to Australia, 0.2 per cent to Latin America and 1.4 per cent to the US.
Ripples from Myanmar people’s protest against the Koh Tao murder verdict have not yet reached two-way trading. Border shipments from Thailand to Myanmar still grew by an average of 20 per cent.

Border trade
Two-way border trade with the four adjacent countries – Malaysia, Myanmar, Laos and Cambodia – rose by 6.4 per cent to Bt957.79 billion in the first 11 months of this year. Outbound border trade increased 4.4 per cent to Bt561.74 billion, while inbound trade rose 9.5 per cent to Bt396 billion.
Despite the declining sales overseas for Thai goods, sales abroad of the service sector climbed strongly by 14.8 per cent in the first nine months of this year to $44.42 billion.
Tourism is the strongest driver of Thai service exports this year. Exports of tourism services soared 21.9 per cent to $32.3 billion, which was 72.7 per cent of total service exports, Somkiat said.
Kulaya Tantitemit, director of the Fiscal Policy Office’s Macroeconomic Policy Bureau, said the FPO still saw exports picking up next year, but it would be by less than the 2.5 per cent that had been predicted.
The contraction of 5.5 per cent in the past 11 months is already bigger than the FPO’s current contraction projection of 5.4 per cent for this whole year.
The export sector will continue be one of the drags on the economy next year, as it accounts for 65-70 per cent of gross domestic product.
 It will continue to be a victim of the softening of global demand, as many major trading partners are still gradually recuperating while China is faltering.
“It can be seen now that the global economy, which was expected to improve by a bigger margin than this year, is now only expected to recover gradually or be better than this year but not by much,” she said.
The exchange rate is also expected to be volatile from the divergence in the monetary policies of advanced economies.
The estimated low crude-oil price of about $50 per barrel on average in 2016 will continue to put pressure on agricultural prices, which is a major part of the country’s export sector.