News Room - Business/Economics

Posted on 19 Nov 2008

2009 export performance hinges on major markets (Thailand)

 

Thai exports to its major markets will drop only marginally next year if economic contraction in the US, European Union and Japan is less than 1 per cent.

 

A study conducted by the University of the Thai Chamber of Commerce showed that 2009 export revenues would be just Bt112.56 billion less based on a conservative assumption of GDP contractions in the US, EU and Japan.

 

The International Monetary Fund has predicted that the US economy would face a negative growth of 0.7 per cent. That will could lead to Thai export value dropping by 8.9 per cent or Bt62.80 billion.

 

If the Japanese economy contracts slightly by 0.2 per cent, Thai exports will fall by 2.1 per cent or Bt15.28 billion.

 

A 0.5 per cent contraction of the EU economy will hurt exports by 4.3 per cent or Bt34.47 billion.

 

Thailand's export machinery accounts for 60-70 per cent of the country's GDP, making it a key driver of economic growth.

 

To help ease pressures on exporters, the government should also consider bringing down the interest rate by 0.5-1 per cent.

 

In addition, the corporate tax rate should be reduced to support small and medium-sized enterprises, said Aat Pisarnvanich, director of the university's International Trade Studies Centre.

 

According to Aat, the country's export growth would likely be less than 5 per cent next year.

 

This should also prompt the government to penetrate new markets and also help the private sector to upgrade the quality of Thai products to meet international standards.

 

The centre suggested that the government and exporters should focus more on countries with whom Thailand has signed free-trade pacts -China, India, Japan, New Zealand and Australia.

 

In addition, they should turn towards potential markets with high purchasing power such as the Middle East and Africa to offset the loss in those three main importing countries.

 

However, the private sector still has worries about uncontrollable factors such as fluctuating exchange rate, oil prices and tariff privileges.

 

They urged the government to hold talks with other exporting countries to protect any trade obstacle forms.

 

"We don't think that Thailand's exports will face negative growth next year despite the global economic downturn as new export markets comprise 60 per cent of total exports," Aat said.

 

Thai products likely to be hit the hardest are hi-tech manufactured goods, the fishery sector, farm goods, mining, forestry and others.