News Room - Business/Economics

Posted on 14 Apr 2010

Thai exports forecast to grow by 17-24% in 2010

Kasikorn Research Center expects Thai exports to overcome the strong baht and domestic political turmoil to grow by 17-24% in dollar value this year, with their recent surge being sustained by the implementation of the Asean Free Trade Area (Afta) and other free trade agreements (FTAs), as well as the recovery of trading partners.

 

The centre has spotted several positive factors for Thai exports, which have seen two-digit growth for the last four months. Year-on-year growth reflects last year's low exports as well as rising demand for Thai goods, said the centre.

 

The sector has also been boosted by the implementation of various FTAs, including Afta and Asean-China, Asean-South Korea, Thailand-Australia, Thailand-New Zealand and Thailand-Indian agreements.

 

Many export items under recently implemented zero tariffs have also seen marked increases. Thai auto and auto parts exports to Asean, for example, were up by 103.8% year-on-year over the first two months of this year. Rice rose by 181.7%, rubber by 72.6%, rubber products by 75.3%, air conditioners and parts by 111.4%, and electronics by 88.3%.

 

Thai exports to Brunei, Indonesia, Malaysia, Singapore and the Philippines soared by 73.2% in February, accelerating from 66.6% growth in January. Exports to China increased by 75.7%, to South Korea by 88.8% and to India by 141.7%.

 

The economies of these trading partners are set for further growth from their governments' stimulus measures, although many will soon turn to stricter financial and treasury policies to combat rising inflation.

 

The centre expects the US economy to continue to recover as reflected by its falling unemployment, while China maintains its high economic growth despite measures to control credit movement.

 

Although many European markets face severe deficits, large public debts and high unemployment, other trading partners like Asean, Australia and the Middle East will generally benefit from rising prices of consumer products.

 

But the buying frenzy could ease once businesses have restocked their inventories in anticipation of returning demand and rising prices. Market demand will then become the main drive for imports, said the centre.

 

The strengthening of the Thai baht will also cause problems for exporters in some industries. Although many currencies in the region are moving in the same direction, Thai exports may lose out to competitors in some markets. For example, exporters of Thai agricultural products, textiles, shoes and leather goods will find it harder to compete against Vietnamese counterparts.

 

The strong baht could allow Thai businesses to import cheaper machinery and raw materials as well as help the government curb inflation. But it will hurt the economy by lowering the competitiveness of the export sector. GDP is expected to slip by 0.7% with every 5% rise in the baht's value, said the centre.

 

Thailand's ongoing political turmoil has yet to have much impact on exports. But overseas buyers may become worried that Thai suppliers will not be able to deliver shipments.

 

Taking all relevant factors into account, the Kasikorn Research Center believes export growth in the first two months will continue over the rest of 2010, which is expected to see the dollar value of exports rise by 17-24%, while imports grow by 29-36% and the trade surplus falls to between $6.0 billion and $8.6 billion.