It says exports in 2017 should grow for the first time in five years.
The main reason is that oil prices have bottomed out. The oversupply witnessed this year due to increases in production capacity of several countries, particularly Iran and Iraq, should be relieved to a significant extent after the fall in the United States’ production of shale oil.
Coupled with the gradual revival of global economy, oil demand and consumption should go up. The International Monetary Fund recently forecast that global oil prices in 2017 would average US$50.60 per barrel, an increase from $43 in 2016.
These are contributing factors to Thai exports of such oil-related goods as refined fuels, plastic resins, chemical products and rubber, which combined account for more than 13 per cent of total Thai export value.
Meanwhile, exports to emerging markets, such as Cambodia, Laos, Myanmar and Vietnam (CLMV) and “new frontiers”, have continued to grow, reaping the following advantages. The CLMV countries are among the strongest in the world in terms of economic growth, at around 7-8 per cent. Thai exports to CLMV (roughly 10 per cent of total export value) have already outpaced those to the European Union and Japan. Major exports with high prospects in CLMV include consumer goods and construction materials.
The average growth of Thai export value to so-called new-frontier markets over the past 10 years has been 10.5 per cent annually, higher the overall average of 6.8 per cent per year.
Thailand’s export value base in 2016 is small, having contracted every year since 2013. Growth in export value this year is expected to be flat, or possibly minutely positive. Therefore, from such a small base, export value in 2017 is predicted to expand to some extent.
However, certain concerns prevail for Thai exports in 2017, including the stated protectionist policies of the incoming US president, which may have impacts on Thai exports, both positive and negative.
The US withdrawal from the Trans-Pacific Partnership would help relieve Thailand’s disadvantages against its major trade competitors that are in the TPP, especially Vietnam, which is Thailand’s main competitor in exports of such products as electronics, textiles, shoes, canned seafood, and air-conditioners.
Increased US tariffs on imports from China would be an opportunity for Thai exports to win back some market share, as Thai goods such as automobile tyres and air-conditioners have been in competition with Chinese goods in the United States. However, such measures could also affect Thai exports of raw materials and semi-raw materials to China for the latter’s exports of finished products to the US. Some of these products are parts and accessories for smartphones and computers.
Moreover, the researchers recommend keeping a close watch on the nationalism tide, and how much that will determine the outcome of the German and French elections in 2017. If there is a switch in the ruling political parties, money-market and foreign-exchange fluctuations will be seen from time to time. Therefore, Thai exporters should get prepared to cope with such challenges with the use of risk-hedging tools.