Thailand: Strong baht, higher wages ‘may slow 2018 exports’
Exports may grow at a much slower pace of 3.5% this year due to a strong baht and higher wages, after expanding nearly 10% in 2017, a group of Thai shippers said on Tuesday.
Last month, the group raised its 2018 export growth estimate to 5.5% from 5.0%, and assumed an average exchange rate of 33 baht to the dollar.
But it has yet take into account the impact from an average 3.4% rise in minimum wages, Ghanyapad Tantipipatpong, council chairwoman, told a briefing.
Ghanyapad Tantipipatpong is pictured on Aug 10, 2017. (Photo by Taweechai Tawatpakorn)
Some exporters could raise the prices of their goods to cover the additional costs, which could further reduce their competitiveness, while others could scale back production.
“If we don’t do anything about the strong baht impact… and the wage increases, export revenue could be cut by $5 billion,” she said.
The baht has appreciated about 3% against the greenback so far this year, and was trading on Tuesday at 31.52 per dollar, hovering at four-year highs.
Ghanyapad said the group has urged authorities to keep baht’s moves in line with regional currencies and to introduce measures to soften the impact of the wage increases, which will start in April.
The Bank of Thailand (BoT) has said it will ensure the baht’s strength does not adversely impact businesses.
Exports are a key driver for the Thai economy and posted solid growth in 2017 despite the baht appreciating 9% against the dollar.
BoT director Don Nakornthab told a seminar on Tuesday the dollar’s stronger outlook will weaken the baht, helping Thai exports to “some extent”.
The Finance Ministry last week predicted 2018 economic growth of 4.2%, with exports up 6.6%.