Export Sector Recovery Expected in 2nd Half of 2023

[snoop1130]

 

BANGKOK (NNT) - Amid economic uncertainty and an inflationary environment posing challenges for Thai exports in the first half of 2023, the Ministry of Commerce anticipates a recovery for the country’s export sector in the second half of the year.

 

Department of International Trade Promotion Director-General Phusit Ratanakul Sereroengrit stated that Thai outbound shipments are expected to contract in the first and second quarters as importers still have large stockpiles. However, exports are expected to bounce back in the second half of this year.

 

According to the ministry’s data, the customs-cleared value of exports decreased for the fifth month in a row in February. For the first two months of 2023, Thai exports fell by 4.6% to 42.6 billion U.S. dollars. Factors in exports last month included a high base in February 2022 and key importing countries facing mounting pressure from the global economic slowdown, which hamper demand for products.

 

High inflation in many countries also affected consumer purchasing power, resulting in pressure on Thai exports. However, Thai exports of agricultural and agro-industrial products grew 3.6% year-on-year in February to 3.9 billion dollars, while industrial product exports declined for a fifth consecutive month in February, falling 6.2% to 17.6 billion dollars.

 

The government maintains its export growth target of 1-2% for the year, compared with a 5.5% increase in 2022. Despite the challenges faced by the Thai export sector, the Commerce Ministry remains optimistic that the industry will recover later in the year and continue to contribute to the country’s economic growth.

 

Source: https://thainews.prd.go.th/en/news/detail/TCATG230331140804689

 

-- © Copyright NNT 2023-03-31

 

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[RichardColeman]

12 hours ago, snoop1130 said:

Despite the challenges faced by the Thai export sector, the Commerce Ministry remains optimistic that the industry will recover later in the year and continue to contribute to the country’s economic growth.

Drop the baht 10%, and you'll get 20% more business

[nigelforbes]

3 minutes ago, RichardColeman said:

Drop the baht 10%, and you'll get 20% more business

BOT studies have shown that doesn't happen, the volume of exports are not directly related to baht strength or weakness but to the state of the economy in the buyers country.

[hotchilli]

12 hours ago, snoop1130 said:

Amid economic uncertainty and an inflationary environment posing challenges for Thai exports in the first half of 2023, the Ministry of Commerce anticipates a recovery for the country’s export sector in the second half of the year.

Don't bank on it.

[nigelforbes]

@RichardColeman

 

"Considering the relationship between growth of export value and exchange rates over the past 10 years, the results suggest that several periods of baht appreciation against the U.S. dollar, such as in 2010- 2011 and 2017, coincided with strong export growth US (Chart 1). Conversely, in some periods, such as in 2009 and 2014- 2015, despite the weakening of the baht, export value contracted. Indeed, in addition to exchange rates, export value may be driven by other factors as well, for instance trading partners’ income or even specific factors such as structural economic problems that could arise either domestically or externally".

 

In order to study and compare the importance of exchange rates and other factors on exports, the analysis needs to be complemented by econometric models. The estimation results on the relationship between export volume and the Real Effective Exchange Rate (REER)12/ show that the appreciation of REER reduces export volume in line with theories. Nevertheless, the elasticity of exports to exchange rate movements is found to be lower over time, suggesting a weaker link between the REER and export volume. In particular, a 1 percent appreciation of the REER in the past would reduce export volume by approximately 0.6 percent13/ . However, the elasticity now decreases to around 0.3 percent and becomes statistically insignificant during the past two years. Moreover, exchange rates have much less impact on export volume than income-related factors.

 

https://www.bot.or.th/English/MonetaryPolicy/MonetPolicyComittee/MPR/BOX_MRP/BOX_MPR_June2018_2.pdf