Exports to fall 12.5% in baht terms

Thailand's export value in baht terms will be 12.49 per cent lower in the second half of the year than the first due to the continued appreciation of the currency, the University of the Thai Chamber of Commerce (UTCC) said yesterday.

The estimate is based on an exchange rate of Bt34.48 to the US dollar and an assumption that the currency will lose some value during the rest of the year.

The government had projected export growth at 12.5 per cent for the year, to US$145 billion (Bt4.9 trillion), based on an exchange rate of Bt35.50-Bt36 to the dollar.

The university said the Kingdom would achieve its growth target of 12.5 per cent in dollar terms but that it would post lower income in baht terms.

UTCC also expects a decline in the growth rate of export revenue in the third quarter, particularly in the European, Asean, Australian and Chinese markets, due to the stronger baht.

Aat Pisanwanich, director of the university's Centre for International Trade Studies, said exporters had faced a currency loss of 8.19 per cent in the first half of the year and another 12.49 per cent is expected in the second half, compared with the first six months. He said small and medium-sized enterprises (SMEs) would suffer the most from the stronger baht, because of a lack of credit flexibility.

The university also forecast that the baht would continue its appreciation in the third quarter and record a new peak of 32.50/33.50 to the dollar. It predicted the average value would stand at 34.48 to the dollar this year.

However, the current-account surplus will remain, which will further push the currency to Bt34.01 in the third quarter - up 9.65 per cent from the same period last year.

Based on a survey of 150 respondents, 53 per cent said their business was facing difficulty because they are SMEs.

Major sectors suffering from the stronger baht include garments, jewellery and furniture.

In the first five months, furniture-export value fell 17.63 per cent, garments 10.09 per cent and jewellery 8.25 per cent.

The university forecast that exports would increase 9.1 per cent in the third quarter and 3.37 per cent in the fourth.

To tide over the drop in the baht value of exports, Aat said exporters would have to quote higher prices to compensate for the losses in the remaining months of the year.

"An increase in selling prices will slow export growth in the second half, compared to the first half of about 18 per cent," he said.

To ensure export competitiveness, the university called on the government to encourage exporters to invest in neighbouring countries, while creating short-term measures to stabilise the value of the baht.

The baht is among the three Asian currencies that have appreciated the most, after the Indian rupee and the Philippine peso.

In addition, the university found that by the year-end, the current-account surplus should more than double to reach $7.72 billion, from $3.24 billion last year. The trade surplus will reach $7.36 billion, with exports of $145 billion and imports of $138 billion, it said.

However, it forecast that the country would miss its target for the number of tourists this year, with arrivals likely to reach only 13.9 million against the target of 14.8 million, due to political concerns earlier in the year.

Petchanet Pratruangkrai

The Nation