Exports slump 2.5% in June
Commerce keeps 15% target despite EU woes
The Commerce Ministry stood firm on its 15% growth target this year despite Thai exports in June sliding by 2.5% year-on-year due to the ongoing euro-zone crisis.
Economists and private sector employees are more pessimistic. They see Thai exports growing by 8-10%.
Deputy Commerce Minister Poom Sarapol said Thailand shipped US$20.1 billion (636 billion baht) of goods in June. Euro-zone troubles impacted production and sales in several key markets such as Japan, South Korea, South Asia and Taiwan.
June exports to the 15-original EU members dropped by more than 16% year-on-year. Exports to Japan dropped by 0.5%, while US shipments rose by 5%.
June imports were $20.7 billion, up by 4.41% year-on-year. The country's deficit was $550 million.
Exports in the first half of the year were $113 billion, down by 1.66% year-on-year. During this period, Thailand imported $123 billion, up by 10.28%, incurring a trade deficit of $10.3 billion.
Mr Poom said the ministry maintains this year's export growth projection of 15% or $2.24 trillion, although several parties have expressed concern about whether the target was achievable. The ministry vowed to work harder to promote exports.
Sutapa Amornvivat, the chief economist at Siam Commercial Bank's Economic Intelligence Center (EIC), said Thai exports in the second half of this year will face challenges emanating from Europe.
"The EIC estimates if the euro-zone situation grows more severe, this year's exports will grow by only 8% from the baseline projection of 11%. Furthermore, in the medium- and long-term, Thai exporters to the EU will be adversely affected by GSP graduation," she said.
Beginning in 2014, as many as 50 Thai export commodities will be relieved of the GSP tariff privilege. In the longer term, however, all Thai products run the risk of having their GSP privileges revoked. Thailand is now an upper-middle income country and may no longer qualify for trade support.
"[With] GSP graduation, Thailand will lose its price competitiveness and, in turn, the market to its competitors, which may have similar export goods, but enjoy tariff privileges from the EU," said Dr Sutapa.
Phongsak Assakul, chairman of the Thai Chamber of Commerce said export growth could be up by 10% from last year and may be greater, if the government calls a meeting of working groups to eliminate export obstacles within the next two months. Export volumes tend to be better in the second half, which is the peak period.
Dr Sutapa said Thailand's economy will rise by 5.6% to 5.8% this year as domestic demand grows, energy costs decline and employment remains high.
Another supporting factor is the strong recovery of industrial sectors after last year's flooding. However, euro-zone debt woes, a slow US recovery and a soft landing in China will continue to hurt the global economy and pose a risk to Thai exports.
By Phusadee Arunmas
26 July 2012