Exports pose risk to 2015 outlook

Exports pose risk to 2015 outlook

The export sector remains a downside risk to reviving the economy at a time of global fears about deflation in the euro zone and Japan, say economists.

Since exports account for 60% of Thailand's GDP, the main concern clouding growth impetus in 2015 is the export growth outlook amid uncertainty about the global economy, said Supavud Saicheua, executive director and head of research at Phatra Securities Plc.

He said Thailand's GDP was estimated at 12 trillion baht, and exports contributed about 8 trillion of total GDP, so a 1% loss in export growth was worth 80 billion.

"Exports have not recovered since the floods in 2011, and I'm not sure why they have not rebounded in the past three years," said Mr Supavud.

"Some people might think that exports might not be affected by the appreciation and depreciation of the baht. But the point is, how ample is global purchasing power?

"I have to admit it is not high, as reflected by monetary stimulus measures adopted by the European Central Bank and the Bank of Japan as well as how China has implemented several stimulus packages."

Despite the poor export outlook, Phatra Securities forecasts exports will grow by 3% this year — far higher than the 1% growth projected by the Bank of Thailand.

Exports grew 3.1% on an annual basis in 2012, but the growth rate contracted by 0.2% in 2013, while hopes of decent export growth in 2014 were dimmed by a year-on-year contraction of 0.42% to US$209 billion in the first 11 months.

In addition to the fragile global demand, falling agricultural prices and Thailand's failure to shift to manufacturing more sophisticated technological products are grounds for lower-than-expected export growth in recent years, the Bank of Thailand said.

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