Export sector gets boost with US decision
The Commerce Ministry announced it is of the opinion that exports will not contract this year after the United States agreed to reinstate its Generalized System of Preferences (GSP) for Thailand for the next four years and five months.
The GSP allows reduced tariffs on certain items and the US did not renew it for Thailand when it expired on 31 July 2013. By reinstating the GSP it gives Thai exporters the opportunity to claim tax refunds for the past two years on some 3,400 items worth 6.2 billion baht. Most of the products are ceramics, sanitary ware and processed food.
The Commerce Minister Chatchai Sarikulya was quoted as saying that while many government agencies were gloomy about Thailand’s export position for this year, he believed his bailiwick would escape any contraction.
The Thai National Shippers’ Council announced it believed exports could contract by as much as 3.5 percent this year if the last six months showed returns of anything less than the equivalent of US$18.7 billion a month, every month from now on.
The Commerce Ministry announced that exports fell for the fifth successive month, that is from January to the end of May, with just US$18.4 billion in returns, which was five percent down on a year-on-year basis. That result means the trailing five-month performance shows exports are now down 4.2 percent, bringing in US$88.7 billion in sales.
Despite the drops, the Commerce Ministry remains optimistic and is still claiming that over the full year Thailand’s exports will show a 1.2 percent growth, since they expect the second-half of the year to be positive.
In contrast, the Bank of Thailand was far less sanguine. On 19 June the central bank released a revised forecast which was completely at odds with that of the Commerce Ministry by claiming they see a full-year result which will show exports contracting by a total of 1.5 percent. This is down from its original estimate of a 0.8 percent growth.
Basically, the difference in the Commerce Ministry projection and that of the Bank of Thailand is a substantial 2.7 percent. That is, while one expects a 1.2 percent growth, the other is forecasting a 1.5 percent contraction. The reality will almost certainly fall somewhere between the two figures.
The Bank of Thailand is basing its pessimistic figures on structural problems associated with Thai shipments as well as the economic slowdown being experienced by many of Thailand’s major trading partners.
Equally, the potential for sanctions to be imposed on Thai fishing stocks because of issues arising out of use of slave labour and illegal fishing will also have an impact.