Thailand: Weak baht, food shipments aid exports

Despite slower export growth in July, Thai shippers remain bullish that overall exports could rise by between 6-8% this year, helped by a weak baht and increased food shipments.

However, Chaichan Charoensuk, chairman of the Thai National Shippers’ Council, said high global inflation, energy prices, freight rates and price volatility, as well as shortages of raw materials such as semiconductors, steel, cereals, animal feed and fertiliser remain key threats.

Mr Chaichan cited the latest inflation forecast by the IMF, which projected the inflation rates of developed countries to stay at an average of 6.6% this year, with those of emerging or developing markets at 9.5%.

The high inflation rates have delivered a wide-ranging effect globally, especially increasing costs of living and shrinking consumer consumption, particularly among middle and low-income consumers, he said.

China’s economic situation and the slowdown in the EU also warrant close monitoring, said Mr Chaichan.

He said global oil prices are expected to stay relatively high throughout the year, mainly as a result of the Russia-Ukraine war and a hike in the fuel tariff, causing production costs in the industrial sector and cost of living in the household sector to increase accordingly.

“Shippers are calling on the government to help stabilise domestic oil prices at appropriate rates through existing mechanisms and tools to curb the burden from worsening on entrepreneurs and consumers,” said Mr Chaichan.

“We are also asking the government to reconsider controlling or fixing the fuel tariff until next year to alleviate the financial burden of producers and households.”

The government is also being urged to allow the private sector to raise the prices of products and services, in line with market mechanisms and genuine production costs so companies can continue operations, he said.

The Commerce Ministry reported on Aug 26 the customs-cleared value of exports continued to expand for the 17th consecutive month, but at a slower growth rate of 4.3% to US$23.6 billion (829 billion baht) after robust growth of 11.9% in June, 10.5% in May, 9.9% in April and 19.5% in March, which was the highest level since records began in 1991.

Exports from the real sector (excluding gold, oil-related products and weaponry) rose by 4.1% after healthy increases of 10.4% in June, 11.1% in May, 6.9% in April and 8.9% in March.

Supporting factors include higher prices of agricultural and food products as world output has been disrupted by many factors, such as Ukraine’s limited grain exports in the previous period and import restrictions in some countries.

Imports increased by 23.9% in July to $27.2 billion, resulting in a trade deficit of $3.66 billion.

For the first seven months of 2022, exports expanded by 11.5% to copy73 billion, while imports rose by 21.4% to copy83 billion, resulting in a trade deficit of $9.91 billion.

Source: https://www.bangkokpost.com/business/2385773/weak-baht-food-shipments-aid-exports