Exports may rebound, but depends who you ask

Private-sector forecasters are more cautious, with some pencilling in another year of declines while keeping their bets open for a wafer-thin expansion in the key sector.
The Thai National Shippers’ Council is looking at a range of minus-1 per cent to flat growth for exports; the University of the Thai Chamber of Commerce’s Economic and Business Forecasting Centre predicts expansion of about 0-1 per cent.
Forecasters outside of government are concerned by the outlook for sluggish growth in the global economy, especially in the European Union, Japan, China, and even the United States – despite mixed views on the latter. Policies to come out of Washington under the presidency of Donald Trump are unclear.
Nopporn Thepsithar, chairman of the Thai National Shippers’ Council, said the council’s forecast of a potential fifth year of shrinkage in the export trade draws on uncertainties in the global economy – even though it is leaving the door open for flat growth.
The International Trade Promotion Department’s outlook says many factors will influence the value of Thai shipments in 2017.
Positive factors include the view that the global economy, by some counts, will expand by 3.4 per cent, against 3.1 per cent last year. The department also forecasts that the oil price will rise to an average of US$55 per barrel, while the exchange rate will be about Bt35 against the US dollar. 
Malee Choklumlerd, director-general of the department, said that with the uncertainties hanging over economic growth in many markets, the government would focus on exports to emerging markets including India, the Asean nations, Russia, and the Middle East. These markets are expected to have strong economic growth in 2017; this will drive purchasing power.
However, risk factors that need to be closely monitored including the possibility of larger fluctuations in the exchange rate, the US Federal Reserve’s expected interest-rate rises that could further strengthen the US dollar, and the guessing game around the policies of the incoming US president. 
Then, add the impact from Brexit, with the UK on course to begin negotiations this quarter over the country’s exit from the European Union. Elections in France and Germany, where the ruling parties are staring down invigorated populist parties, may also throw up surprises.
Rising non-tariff barriers, an increase in value-added tax to 10 per cent on goods imported into Laos, and Japan’s plan to raise VAT from 8 to 10 per cent by 2019 will add to pressures, Malee said. 
In a bid to boost exports, the Commerce Ministry has launched a number of strategies for the five years to 2021. These are focused on achieving greater market access and economic cooperation, along with demand-driven marketing, trade promotions with Cambodia, Laos, Myanmar, Vietnam, China and India, and outward-investment promotion. 
The initiatives also cover trade in services, innovation-driven enterprises and value creation, Malee said.
Within these focus areas, there are plans to penetrate specific markets within Cambodia, Laos, Myanmar and Vietnam. Fanning out wider, countries such as China, India, Iran will come in for more attention, along with countries that have free-trade agreements with Asean. Thailand will also firm up cooperation with strategic partners and deepen marketing plans to key cities.
As part of efforts to drill down into specific countries, consumer groups in these markets will be targeted, with products suiting segments such as the elderly, the health conscious, pet lovers and those with environment concerns.
With the boom in online trading, the department will also make greater use of e-commerce channels, with marketing aimed at the likes of Amazon.com, Alibaba and TMall.
Moreover, Thailand will place greater emphasis on trade in high-value goods and services in the coming years. Many local products will be promoted in a bid to raise awareness of Thai brands, drawing on key elements such as innovation, as part of the process for these brands to achieve global recognition.
Malee said service businesses would play an increasingly significant role in creating national income, while the export of goods would over time play a reduced role. The government will, therefore, be more concerned about driving service-business growth for the long term.

Brighter outlook for many products
In 2017, many products are expected to enjoy stronger overseas orders. They include automobiles and parts; this segment accounted for 15.2 per cent of total export value last year. 

Key sectors
Surapong Paisitpattanapong, spokesman for the Federation of Thai Industries’ Automotive Industry Club, said export of cars and parts would grow by about 5 per cent in 2017. Thailand is still the largest car-production centre in Asean. Countries in the Middle East, Africa and Latin America are driving demand for exports of Thai-made vehicles, especially small passenger cars and pickup trucks. The closure of car-production plants in Australia (Ford, Toyota, and Holden) will create opportunities for Thailand to sell more cars in these growing markets.
For electronic products and electrical appliances, expectations remain strong. The sector accounted for 25 per cent of the country’s exports by value last year. Investment and export promotions will support the industry this year.
Memory devices and cloud computing equipment, solid-state drives and air-conditioners will be the top export performers in this group, the Commerce Ministry believes, benefiting from the trend towards urbanisation in many countries.
Another pillar of Thai exports is the agricultural products and foods sector. This made up 15 per cent of the country’s total export value in 2016. The sector should post an even stronger performance this year, in line with expected higher commodities prices aided by rising oil prices. Products tipped to shine are fishery products, chicken, shrimp, and processed seafood, the ministry says. 
It says the elimination of shrimp disease and the progress against illegal, unreported and unregulated fishing spell better prospects for the Thai fishery industry.
Another strong performer is expected to be the jewellery and ornaments sector. Somchai Phornchindarak, president of the Gems, Jewellery and Precious Metal Confederation of Thailand, predicts that exports of gems, jewellery and ornaments will grow by about 5-10 per cent this year.
The hopes are fuelled by expectations of higher demand in many emerging markets where consumers have increased spending power.