Chinese woe threatening Thai exports

Chinese woe threatening Thai exports

Thailand's exports are expected to grow by only 3-4% this year, much lower than the 5% targeted by the Commerce Ministry, as China's slowing economy poses higher risks to shipments.

"China's economic prospects are a key concern for Thai exports this year," said Wallop Vitanakorn, vice-president of Thai National Shippers' Council.

"What we can do right now is just wait and see how the Chinese government will tackle its economic issues."

He said China now plays a vital role in Thai exports, with exports there last year fetching US$27.2 billion and accounting for 12% of the country's overall exports.

For the first two months of this year, Thailand's shipments to China reached $4.39 billion, down by 0.8% year-on-year.

Key export products are farm items, raw materials and semi-raw materials as well as electronic parts.

Most products are supplied to Chinese producers.

While there is no clear sign yet of economic recovery in the US, Thailand needs to monitor the impact of the rise in Japan's consumption tax to 8% from 5% on that country's economy and local consumption, Mr Wallop said.

"In the first quarter, we project the country's shipments may be subject to a contraction of 0.2%," he said.

"Export strategies need to shift to promote more border trade and export expansion to more potential markets such as Russia, China, Asean, the Middle East, Africa and the Commonwealth of Independent States while maintaining traditional key markets."

The Commerce Ministry is today due to release export figures for March and the first quarter, with a source saying exports in the first quarter contracted by 1% year-on-year.

Mr Wallop said another key risk to exports is a lack of a functioning government.

Without a functioning government, Thailand's preparations for Asean economic integration, due late next year, and negotiations on free trade agreements (FTAs) will be difficult, he said.

Mr Wallop said negotiations for a Thai-EU FTA are desperately needed.

This is mainly because Thailand is in danger of losing its Generalised System of Preferences (GSP) status in European countries this year.

Without the GSP, Thai goods exported to the EU would be subject to a 12% import tariff next year, up from 9.6% now, making Thai shipments less competitive in the EU market, particularly against Vietnamese products.

The GSP issue may lead certain investors to relocate their production bases to neighbouring countries, Mr Wallop warned.

For the first two months of this year, Thailand's exports still managed to grow marginally by 0.2% to $36.3 billion.

Benjarong Suwankiri, a first vice-president of TMB Analytics, said TMB Bank is also poised to cut its export growth forecast next month from the 4.5% projected earlier.

"Thailand's export growth is relatively slow despite the global economic recovery," he said.

"This is because of the country's export structure, which relies heavily on the agricultural sector while farm prices are pretty low."

Mr Benjarong said it is highly likely that Thailand would end this year with export growth of only 3% due largely to the Chinese factor.

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