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Strong Baht Slows Down Export Growth

Economics +1 more

THAILAND - Despite the expansion of exports for 10 consecutive months, the appreciation of the baht has slowed down the export of some goods over the past month, a report from the Commerce Ministry said.

Thai shipments grew 23.88 per cent year on year last month to US$16.45 billion (Bt505.75 billion), while imports surged 41.14 per cent to $15.8 billion, resulting in a trade surplus of $642 million, said TheNation.

Exports in the first eight months jumped 32.63 per cent to $125.08 billion, while imports rose 47.86 per cent to $119 billion. Thailand's trade surplus totalled $6.08 billion in the first eight months of this year.

"Rice, fruit and vegetables, construction goods, printing and jewellery started to shrink in August due to the baht's appreciation. The ministry will work closely with exporters and set up more activities to promote t expansion to ensure growth," Commerce Minister Porntiva Nakasai said.

Despite the slow down in growth for some products, the ministry is confident that export this year will achieve its 20 per cent target to $183 billion, due to a strong growth in the first half of the year.

She added that if the baht does not go below Bt30 against the US dollar, Thai exports should not be seriously affected this year.

The ministry will soon be launching the "Export World Tour" project, which will target markets in the Asean, India, China and the Middle East.

Vichai Assarasakorn, president of the Thai Gems and Jewellery Exporters, said a stronger baht would be a key factor to the shrinking down of exports for the rest of the year.

Thai exporters are becoming less competitive compared to other export rivals, and if the government does not come up with concrete measures to solve the problems, local shipments would be hit dramatically, he said.

He pointed out that though jewellery and ornaments were high valueadded products, they only contained 30 per cent of local raw materials. Therefore, the appreciation of the baht would cause difficulties in business growth and affect the million or so workers employed in the industry.

The export of jewellery and ornaments dropped by 14.4 per cent year on year last month. Other products that showed a significant slump included rice, which dropped by 18.6 per cent, tapioca by 42.1 per cent, sugar by 42.5 per cent, fresh fruit and vegetables by 2.8 per cent, construction goods by 9.2 per cent and printing products by 1.9 per cent.

The ExportImport Bank of Thailand reported that the baht's 4.3percent appreciation in the past month had started to destroy the competitiveness of Thai exports with its rivals, including Brazil, China, South Korea, India, Ecuador, Vietnam, and countries in the euro zone.

The locally produced goods that will be hardest hit include rice, sugar, cooked chicken, frozen and processed shrimp, canned tuna, printing products, plastic, footwear and textiles.

Korbsook Iamsuri, president of the Thai Exporters Association, said that with the appreciation of the baht, the price of Thai exported rice has automatically gone up.

"This has made Thai rice the most expensive among other kinds of rice, but export income has dropped by eight per cent due to the stronger baht," she said.

To ensure that Thailand remains competitive, exporters are calling on the Bank of Thailand to meet leading private organisations, including the Board of Trade and Federation of Thai Industries to listen to their problems and implement measures to stabilise the baht.

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