The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) yesterday announced its latest forecast, predicting that exports would post flat growth or contract by as much as 2 per cent this year.

In its view, global economic uncertainties will increase over the remainder of the year, with the United Kingdom’s “Brexit” decision to leave the European Union as a major catalyst.

The JSCCIB’s previous forecast was for 2-per-cent export growth in 2016.

Exports – contributing about 70 per cent of the Kingdom’s gross domestic product – have contracted in each of the past three years.

Thai Bankers’ Association chairman Predee Daochai, who chaired the meeting, said that while Brexit impacts on the Thai market would be short-term, the UK electorate’s decision to exit the EU was another factor that increased global economic uncertainties, which would dampen orders further.

Aside from the impact on exports, the JSCCIB also discussed the advantages and disadvantages of forming a bilateral trade agreement with the UK, once the country formally begins the process of leaving the EU.

Exporters in the automobile and electronics sectors are among those that face a slowdown in orders from global buyers, he said.

Although the EU and the UK are not major buyers of Thai-made automobiles, a slowdown in purchasing power in Britain will be enough to put pressure on the demand for vehicles, he added.

Despite revising its export forecast for this year, the joint committee maintained its forecast for Thai GDP growth at 3-3.5 per cent, hoping that private consumption and government spending would further buoy the economy.

Separately, the Bank of Thailand’s overall Business Sentiment Index (BSI) in June showed an improvement from May, thanks mainly to lower production costs as a result of falling commodity prices.

Most respondents were optimistic about prospects for the next three months, as their confidence remained above the 50-point mark.

However, the BSI confidence level for June itself fell slightly from May, at 53.6 points compared with 52.6 points, because of continuing concerns over the pace of economic recovery. At yesterday’s press conference, Predee said the US decision to upgrade Thailand’s ranking in the annual Trafficking in Persons Report from the bottom level to the Tier 2 Watch List would increase the confidence of importers, which would in turn give a boost to Thailand’s export sector.

Federation of Thai Industries president Jane Namchaisiri added that the private sector hoped that the country would be removed from the US Watch List soon.

Thailand exports seafood worth around US$6 billion (Bt210 billion) a year, 30 per cent of which goes to the US market, 30 per cent to Japan and 10 per cent to the euro zone. Maybank Kim Eng Securities last week said Washington’s decision to improve the Kingdom’s ranking could lead to an increase in seafood exports to the United States.