Exports to see eased second-half growth

Thailand’s export activity is likely to slow slightly in the second half of 2018 after 11% growth in the first half and 12% in the second half of last year.

Full-year growth is expected at 8.1% or in a range of 7.3-8.9%, according to the latest forecast by the University of the Thai Chamber of Commerce (UTCC).

Last year, Thailand’s shipments grew by 9.9%.

Aat Pisanwanich, director of the UTCC’s Center for International Trade Studies, said exports in the second half were estimated at US$130 billion (4.32 trillion baht), up 5.5% from the same period last year.

The slower performance was attributed to the escalating trade spat, the impact of which is expected to fully materialise this half; weaker currencies in several countries that make the baht’s recent depreciation less competitive; higher oil prices pushing local manufacturers’ production costs; and relatively low farm prices.

For the whole year, the university forecast overall exports to fetch the country $256 billion.

The predictions are based on world economic growth of 3.5%, crude oil at $70 per barrel and the exchange rate averaging 32 baht to the US dollar.

“The overall global economy is expected to continue growing, though certain countries like China, Japan and EU nations are likely to see higher growth this year than in 2017,” Mr Aat said. “The extension of the US Generalised System of Preferences to 3,500 Thai product categories such as electrical appliances, automotive and parts, and rubber, effective from April 22, will also offer a boon to Thai exports this year.”

But Mr Aat said Thailand still needs to follow up on the impact of trade disputes between the US and China, particularly the US’s threat to slap tariffs on imported cars and car parts.

The higher auto import tariffs by the US could cause problems across the car industry’s global supply chain.

Mr Aat also predicted that the trade row between the US and China will be protracted because of the US’s huge trade deficit, most notably with China.

The university estimates that the trade war will shave 0.14-0.23% from Thai export growth, or $350-600 million, and dampen GDP growth by 0.12-0.21%.

The estimate is based on the assumption that the US raises tariffs on $200 billion worth of Chinese goods and $100 billion in EU products as threatened.

Under the worst-case scenario, the centre predicts that Thai export growth will lose 1.13%, valued at about $2.8 billion, and GDP growth will be trimmed by 1.02%.