Thailand: Leaders raise export outlook
Thailand’s top business group has raised its forecast for export growth to a new range of 3.5-4.5% after outbound shipments surged in April and May, but kept its economic growth projection at 3.5-4%.
Despite the upward revision, the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) is pessimistic, believing export growth will slow the rest of this year in line with the decline in global commodity prices, said Predee Daochai, chairman of the Thai Bankers’ Association.
JSCCIB earlier predicted the country’s export growth would be in a range of 2-3.5%.
Thai exports jumped 13.2% year-on-year in May to UScopy9.9 billion (676 billion baht), the highest in more than four years and far above the 8.4% growth in April, despite growing anxiety that a stronger baht will stall the nascent pickup in exports. Exports account for around 70% of the country’s economic value.
For the first five months of 2017, exports rose 7.2% to $93.3 billion, while imports increased by 15.2% to $88.2 billion, yielding a trade surplus of $5.05 billion.
The Bank of Thailand recently said the Monetary Policy Committee is set to hike its export growth forecast for this year from 2.2% at its July 5 meeting following higher than expected export value.
The government has set a lofty target of 5% export growth this year, outstripping the projection of 2.9% by the National Economic and Social Development Board.
The Thai National Shippers’ Council predicted exports may exceed its 3.5% growth forecast if the world economy continues to expand this year.
Baht volatility is a headwind for Thai exports, said Mr Predee. Manoeuvres by the US Federal Reserve to its rate is the major factor determining the movement of currencies across the world, he said.
The market expectation is the US central bank will jack up the rate one more time this year at its policy rate call in December after raising it twice already in 2017.
The baht is one of the best-performing currencies in Asia this year, rising around 5%. Given the anticipation that farm income would be weaker from lower agricultural product prices, the JSCCIB kept its forecast for the country’s GDP growth rate this year unchanged at 3.5-4% amid global economic uncertainties.