Gloomy global outlook worries Thai exporters

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Gloomy global outlook worries exporters
ERICH PARPART
THE NATION



BANGKOK: -- THE FEDERATION of Thai Industries (FTI) said yesterday that exporters are concerned about the World Bank and International Monetary Fund's downgrading of their forecasts for global economic growth, but that it has decided to maintain its projection for the country's exports to expand by 4 per cent this year.

Chairman Supant Mongkolsu-three said export-related industries and large corporations are worried about the global economic situation and the baht. The currency is expected to gain in value from the further depreciation of the euro and capital flows to emerging markets after the European Central Bank (ECB) introduces its stimulus package.

The ECB is widely expected to unleash its own version of quantitative easing today to jump-start the eurozone economy following the Swiss National Bank's decision to give up on its minimum exchange rate of 1.20 per euro.

However, the fall in oil prices and the recovery of the tourism industry are positive factors that led the FTI to leave its export projection untouched.

"Industries have to adapt to the world economic situation by increasing the competitiveness of their products and finding other markets to which to export their merchandise.

"The reason why we did not change our export prediction for this year is because of the falling oil price, which has lowered production costs and allowed us to be more competitive," he said.

"The earlier depreciation of the Thai baht against the US dollar was less than the depreciations of other currencies in the region, which means that we have lost our competitive edge in this respect and fund flows are expected to continue to come to emerging markets before the United States hikes its interest rate this year," he said.

Industries are urging the government to help them explore other market channels to ship their goods overseas.

The FTI wants to see more done on the free trade agreement between Asean and the European Union (EU) to compensate for the withdrawal of privileges from Thai products under the EU's generalised system of preferences (GSP). "Little progress has been made on the FTA deal between Thailand and the EU and to leave it with this deal alone would be difficult, so we have to rely on the FTA between Asean and the EU.

"The government should increase its efforts on this to maintain the country's competitiveness in this field," he said. Chirathep Senivongs na Ayudhya, spokesman for the Bank of Thailand, said the effects from the exclusion of Thai products from the EU's GSP on January 1 should begin to show up right away - this quarter - but they would be minimal since the affected exports only account for 4 per cent of the total.

"Most industries have to pay about 2-6 per cent more tax after the GSP cancellation except canned pineapple and processed seafood, which have to pay more tax.

"The EU still has to import some of our products such as automobile parts and electric appliances since Thailand is still the production hub for them," he said.

Other countries that still enjoy GSP privileges such as Vietnam and Indonesia will have an edge over Thailand, while Malaysia and Brazil, which have also seen their privileges taken away, still have the FTA deal with the EU, but Thailand's deal in still in limbo, he added.

Source: http://www.nationmultimedia.com/business/Gloomy-global-outlook-worries-exporters-30252405.html


-- The Nation 2015-01-22

[chainarong]

This is something that is happening all over the world and like all the previous recessions Thailand will have to ride out the storm , going by the financial reports the US is the only country moving forward, for the rest of us its high unemployment, high costs, limited future for many and bad politicians leading the way.

[taichiplanet]

i don't know much about economics (seems a black art to me!) but the statement

"The reason why we did not change our export prediction for this year is because of the falling oil price, which has lowered production costs and allowed us to be more competitive,"

doesn't make much sense to me. Maybe Thailand use more oil for production but wouldn't lower oil prices basically mean the same for all countries, so all countries can lower their costs, hence no real advantage to be competitive?

[Thian]

Yup Thailand is getting far too expensive, other Asian country's will profit from that. Thai are just too greedy and don't understand how to do business with farang.

[mike324]

"The FTI wants to see more done on the free trade agreement between Asean and the European Union (EU) to compensate for the withdrawal of privileges from Thai products under the EU's generalised system of preferences (GSP)."

Thailand is in a very bad position this year as many of the products that use to qualify for tax free to EU are now being taxed this year. I think the economy all over the world is bad, so there won't be much movement, the companies that are going out of business already have gone, those that flat line will continue to flat line, the ones that are benefiting are mostly from customers who are switching from China to Thailand due to increasing labor wages in China, as well as shortage of labor.

[elgordo38]

This is something that is happening all over the world and like all the previous recessions Thailand will have to ride out the storm , going by the financial reports the US is the only country moving forward, for the rest of us its high unemployment, high costs, limited future for many and bad politicians leading the way.

How can you call this moving forward its all government lies

The jobs recovery is a complete and total myth. The percentage of the working age population in the United States that had a job in March 2013 was exactly the same as it was all the way back in March 2010. In addition, as you will see below, there are now more than 101 million working age Americans that do not have a job. But even though the employment level in the United States has consistently remained very low over the past three years, the Obama administration keeps telling us that unemployment is actually going down.

In fact, they tell us that the unemployment rate has declined from a peak of 10.0% all the way down to 7.6%. And they tell us that in March the unemployment rate fell by 0.1% even though only 88,000 jobs were added to the U.S. economy. But it takes at least 125,000 new jobs a month just to keep up with population growth. So how in the world are they coming up with these numbers? Well, the reality is that the entire decline in the unemployment rate over the past three years can be accounted for by the reduction in size of the labor force.

[Prbkk]

Baht is WAY too strong, tracking roughly with the USD for some unknown reason. Tourism will come under further pressure as other currencies depreciate making it more expensive to visit Thailand ( and making those countries/regions more affordable as destinations themselves).