Thailand's exports are expected to grow by only 3.1% this year, below the 4% target set by the Commerce Ministry, due mainly to the termination of the Generalised System of Preferences (GSP) in European countries and shrinking imports from fragile Japan and China.
"We estimate 3.1% growth to US$235 billion for this year’s exports compared with a 0.4% contraction expected for 2014," said Aat Pisanwanich, director of the Center for International Trade Studies at the University of the Thai Chamber of Commerce (UTCC).
“We expect shipments to the US will increase by 4.2% this year, up from 3.7% growth in 2014, thanks to their economic recovery, with exports to Asean members growing by 3.7%, up from 2.9% last year.”
The UTCC forecast exports to the EU to drop for the first time in three years, down by 0.3% compared with a 6.4% gain last year, due mainly to termination of the GSP, which is expected to cost Thailand 31.5 billion baht in export revenue.
Shipments to China and Japan this year are also expected to drop by 0.3% and 0.5%, respectively, as their economies are unlikely to recover.
Mr Aat said in light of the GSP ending, products from India, Vietnam, Indonesia and the Philippines such as pineapple, shrimp-based food seasonings, automobiles, fresh and frozen shrimp, frozen squid, car tyres, rubber gloves, air conditioners and shoes were expected to see the most benefits.
“Thai products bound for the EU market will also be weakened by that region's economic slowdown and volatile foreign exchange, as the baht remains strong against the euro,” he said.
Mr Aat said Thailand was unlikely to gain much benefit from foreign exchange, as the baht remained relatively higher than the currencies of its main competitors.
Though a weak baht results in higher costs for imported raw materials, the most preferable exchange rate should be more than 35 baht to the US dollar, he said.
To offset bearish performance in key markets, Mr Aat urged Thai exporters to delve into neighbouring countries, most of which still enjoy GSP privileges, as their production bases.
They should also invest or form joint ventures with local partners in those countries. Innovation and cost cutting should be applied to add value and improve product quality.
Other measures include finding new markets and pushing for a free-trade agreement with Europe, he said.
The simmering rouble crisis is another obstacle, Mr Aat said, adding that if it widened to Europe, the global economic recovery might be at risk.