Thailand. Export growth target revised up to 5-6%

25.08.2017

THE Trade Policy and Strategy Office (TPSO) of the Ministry of Commerce (MOC) has revised its target for this years export growth to 5-6 per cent from an earlier estimate of 3.5-5 per cent, thanks to a recovery in global trade, the strengthening economies of trade partners and the bright sales prospects for agricultural and manufactured products. Reflecting this bullish sentiment, the TPSO also flagged a further upward revision, to 6.5 per cent, should these conditions continue.

Pimchanok Vonkorpon, director-general of the TPSO, said that under the new export target, the baht is forecast to stay in a range of 34-36 to the US dollar, compared to a previous projection of 35.50-37.50. If exports attain 6 per cent growth this year, the monthly export figures would average $19.1 billion from August to December and the full-year value would reach $228 billion. These are the estimates of the TPSO. The MOC target for Thai export expansion remains 5 per cent, Pimchanok added.

However, foreign exchange volatility posed to a risk to export growth, she said, warning traders to take on board risk management. Despite the brighter view on exports, Thailand slumped back into a trade deficit for the first time in 27 months, said the Commerce Ministry, citing a rise a rise in imports, particularly gold and oil-related products. Pimchanok said that the deficit of US$187.5 million logged by the country saw the first red ink in the accounts for 27 months - since May 2015, when the country faced a trade deficit of $530.8 million.

However, she expressed no concern over the July deficit, given higher imports of gold and oil-related products. Excluding the gold imports in the month, Thailand had a trade surplus of US$1.09 billion. "Excluding gold and oil-related products (in July) reflects a lot of gold imports for speculation. Meanwhile, a rise in imports is a positive factor to soften the baht appreciation," she said.Pimchanok also expected trade deficits for a further two to three consecutive months, given the appreciating baht that boosts the costs of imported capital goods and raw materials, and gold price speculation that she saw as being a factor in the increased gold imports.

Overall, exports in July advanced 10.48 per cent from a year earlier to US$18.85 billion, thanks mainly to a 29.5 per cent increase in shipments of agricultural and agri-industry products, chalking up export growth for a fifth consecutive month. In July, exports of agricultural and agri-industry products grew for a ninth consecutive month to 29 per cent as rice exports soared 98.8 per cent from a year.

This reflected a bright outlook for rice with the absence of pressure from the Thai government's rice storage. Shipments of frozen, canned and processed vegetables and fruits jumped 61.4 per cent. Among its main markets, Thai exports in July went up 11.6, 9.1 and 8.3 per cent in the United States, Japan and the European Union, respectively. Exports to China jumped 29.2 per cent, followed by Taiwan with 19.6 per cent, India 18 per cent, the CLMV countries


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