THAILAND - The export sector faced a sluggish 2013, with estimated growth of only 0.2 per cent, hit by many negative factors both internal and external. Inevitably, some of those factors will continue into the new year, especially continuing political conflict in this country and an uncertain global economic recovery. The Commerce Ministry reported that exports in the first 11 months of 2013 contracted by 0.49 per cent year on year to US$210.09 billion (Bt6.943 trillion). Shipments by the agricultural-industrial sector fell 5.7 per cent, while those by the industrial sector dropped slightly, by 0.1 per cent.
However, the export picture in 2014 should brighten, with the ministry forecasting 5.9-per-cent growth on expectations of a recovering US economy and a weakening baht, while many industries have learned to adapt their export strategies to a seamless market.
The global economy was hit hard during the past few years by the US-led financial crisis and debt problems in the European Union, while Thailand suffered a blow of its own with the 2011 flood disaster. Now, while there are signs of better prospects globally, the political conflict in Thailand could become a new negative factor for the Kingdom's trading capability.
Nuntawan Sakuntanaga, director-general of the International Trade Promotion Department, has expressed concerns that the prolonged conflict will result in fewer trade delegations coming here. That could result in fewer orders from overseas as traders avoid Thailand's international exhibitions.
Also, analysts warn that a global recovery is still by no means certain. The financial crunch in the euro zone has not been fully resolved, which could continue to challenge demand for Thai exports. A natural disaster could be a double-edged sword for the agricultural sector, resulting in higher crop prices but a shortage of supply.
According to the International Monetary Fund and the Asian Development Bank, global gross domestic product will grow by 3.5 per cent this year, higher than the 2.9 per cent in 2013. World trade will increase from 2.9 per cent in 2013 to 4.5 per cent in 2014.
Among Thailand's major trading partners, the United States' GDP is forecast to grow by 2.5 per cent, the euro zone by 1 per cent, China 7.5 per cent, India 5 per cent, Singapore 3.5 per cent, Vietnam 5.4 per cent, Indonesia 5.4 per cent, the Philippines 5 per cent, and Malaysia 4.8 per cent. But Japan's economy is expected to decline by 1.2 per cent.
The currency exchange rate is expected to benefit Thai exports as the baht weakens. However, fluctuation of the baht could hit traders' confidence. The Economic and Business Forecasting Centre has projected that the Thai currency will average around 33-34 against the US dollar this year, weaker than 2013's average of 30.71.
Fuel prices will be stable this year, if there are no serious negative factors, with the price of Dubai oil expected at $105-110 per barrel, compared with an average of $105 in 2013.
The EU's plan to cut the privileges it grants some trading partners, including Thailand, under its Generalised System of Preferences could affect some exports. However, an extension of free-trade agreements between Thailand and partners including the EU should be a positive factor for export growth.
Many industries are expected to shine more brightly in the Year of the Horse, include automobiles, construction materials, machinery and parts, plastic products, healthcare products, lifestyle goods, and foods.
However, some industries such as electrical and electronic products and garments can expect flat growth, because some large investors have shifted their focus to neighbouring countries, so export figures would grow in other ASEAN nations instead of at home.
Electrical and electronics
The industry expects growth of 0-5 per cent in 2014, held down by concern over the global economy and slowing growth in China, a major importer of components from Thailand, Gritsada Suptuaychone, secretary-general of the Electrical, Electronics, Telecommunications and Allied Industry Club under the Federation of Thai Industries, said.
Shipments of electronics and electrical appliances had been affected by the slowdown in many markets. However, some exports showed signs of reviving in the final quarter of 2013, which would result in expansion in 2014.
Moreover, Kasikorn Research expects that Thailand's electrical-appliance sector should continue to gain on foreign investment, since manufacturing activities are likely to be bolstered in preparation for the inception of the AEC. Export of electric appliances is projected to grow by 5 per cent this year.
Despite high competition, export of textiles is expected to grow by 9 per cent this year.
Phongsak Assakul, president of the Thai Textile Manufacturing Association, said textile exports would grow strongly as the Thai industry is highly innovative. The growth will increasingly be driven by demand in Asian markets rather than Europe and North America.
Currently, about 75 per cent of Thailand's textile exports go to Asian markets, 8 per cent to the EU, and 5.9 per cent to North America.
Export of garments will face a flat growth this year after a contraction of 5 per cent in 2013 after many Thai garment manufacturers expanded their production in other ASEAN countries, said Sukij Kongpiyacharn, president of the Thai Garment Manufacturers Association.
Jewellery and ornaments
Export of jewellery and ornaments is expected to grow by 5 per cent this year, down a bit from 6-per-cent expansion in 2013.
Chirakitti Tang, president of the Thai Gem and Jewellery Manufacturers Association, said one positive factor was a recovering global economy. Meanwhile China has moved its ornament-manufacturing base to Thailand as workers here are known for their expertise., and a growth of colour stones.
Exports of frozen foods are expected to grow by 20 per cent in volume and 10 per cent in value as the supply of shrimp improves, said Poj Aramwattanananont, president of the Thai Frozen Foods Association. A serious shrimp disease reduced output last year.
However, prices will not increase as much as in 2013, when the supply shortage in the world market forced them up considerably.
Kukrit Arepagorn, manager of the Thai Broiler Processing Exporters Association, said exports of chicken meat this year should grow by 5 per cent after dropping by 4 per cent in 2013.
Trade negotiations with Japan, South Korea and the EU should be able to boost chicken exports.
Export of rice is expected to increase from between 6.5 million and 6.7 million tonnes in 2013 to between 7 million and 7.5 million tonnes this year, higher volume but lower value.
Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said the world market had acknowledged that Thailand has an enormous amount of rice in its stockpiles under the pledging project. However, prices would be low as traders will pressure the government to sell rice cheaply.