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Thai exports could drop 0.6% in 2019

The University of the Thai Chamber of Commerce predicts that Thai exports in 2019 will drop 0.6% year on year, the first contraction in four years.

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Export Economy of Thailand

Dr. Aat Pisanwanich, Director of Center for International Trade Studies (CITS) of UTCC, said that total Thai exports this year are expected to reach USD251.338 billion, 0.64% less than last year and the first contraction in four years.

Nonetheless, CITS predicts that Thai outbound shipments in the second half of this year will expand 1.6%, totaling USD128.367 billion, driven largely by the government’s stimulus measures.

To maintain export growth, the value of Thai exports in the remainder of this year must increase at least 2.9% per month, or USD21.664 billion monthly, he added.

Risk factors in the second half include the slowing global economy, an escalating trade war between the US and China, BREXIT, a stronger Baht as well as a possible minimum wage increase

Dr. Aat Pisanwanich, Director of Center for International Trade Studies (CITS) of UTCC

He added that every one-percent increase in minimum wage will lower exports by 0.06%. The proposed minimum wage hike to Bt400 per day is a 30% increase and it could lower Thai exports by 1.8% or by USD4.524 billion.

The Thai Baht has also strengthened, reaching Bt31.60 per US dollar in the first half of this year. It is expected to stay at around Bt30-Bt31 per US dollar this year.

With further US rate cut, the Thai Baht may continue to strengthen

If the US Federal Reserve decides to cut the fed funds rates during the meeting this week, the Thai Baht may strengthen further, reducing the competiveness of Thai exports

Dr. Aat Pisanwanich, Director of Center for International Trade Studies (CITS) of UTCC

The export items seriously affected by a strong Baht are automotive products, electronic parts, rubber and electrical appliances.

He said that the recently-signed free trade agreement between Vietnam and the European Union may also put Thai exports at disadvantage in the EU market.

If the agreement comes into effect in the second half of this year, Thai exports may suffer to the tune of USD680 million. Exports likely to be affected include textiles and apparel, machinery and parts as well as electronics and parts.

If Washington decides to impose additional tariffs on another USD325 billion worth of Chinese goods, and if Beijing retaliates by imposing tariffs on USD60 billion of the US imports, the trade war will escalate. Based on this scenario, Thai exports in 2019 could possibly shrink by 2.6%, Dr. Aat said.

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Pakorn Peetathawatchai, President, The Stock Exchange of Thailand (SET)

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Pakorn Peetathawatchai, President, The Stock Exchange of Thailand (SET)

What measures has SET taken to support listed companies’ compliance with ESG standards?
PAKORN PEETATHAWATCHAI:

PAKORN: When we first began promoting ESG-compliant investments, we were met with little interest. We attributed this to a lack of clear data to showcase the economic benefits of ESG investment, and perhaps limited clarity as to what constitutes a sustainable or ESG-compliant investment. The launch of the THSI list and, subsequently, the SETTHSI Index, was designed to address this. Our most recent data, comparing returns for the SETTHSI Index with the broader SET and SET100 indices from April 2020 to April 2021, underscores the economic benefits of these investments: the group compliant with ESG standards outperformed the other two indices on every data point. 

As of May 2021 Thailand was home to CG and ESG assets under management totalling BT54.8bn ($1.7bn) across 50 funds – up from 23 funds in 2019. Meanwhile, of the BT187.1bn ($5.9bn) raised in green, social and sustainability bonds since 2018, BT136.4bn ($4.3bn) was raised in 2020 – 83% from the government and the remainder from development banks and private players. This rising demand, in a move to manage risk and generate returns, has been complemented by growing supply and promotion: supply from ESG-compliant businesses aiming for resiliency and sustainable growth, as well as promotion from regulators highlighting investment opportunities with good CG and SD practices. Indeed, the pandemic has been a catalyst in shifting the view of ESG compliance from a luxury to a requirement in the new normal.

In what ways can enhanced standard-setting and regulatory mechanisms overcome the remaining barriers to improved ESG performance?

PAKORN: A multi-stakeholder approach is crucial for enhanced ESG performance – not only in Thailand, but around much of the globe. This can also help to address the standout incumbent challenge: access to reliable, wide-ranging ESG data. For example, the 2020 update to the 56-1 One Report established clear ESG standards and triggered online and offline capacity-building programmes to support listed firms’ compliance. SET is developing an ESG data platform with a structured template to promote the availability of comparable data, maximise value added from corporate sustainability disclosures, and foster collaboration between the business value chain and stakeholders. This is expected to support Thai companies along their ESG journey in an economically sustainable way, result in a greater number of sustainability-focused products and services, drive sustainable investing in the Thai investment community and ultimately “make the capital market work for everyone”, as outlined in the SET’s vision.
 

 

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Economics

Youth unemployment hits new highs in Thailand due to COVID-19 restrictions

BANGKOK, Thailand (ILO news) – Joblessness among young men and women in Thailand has reached a level unseen in recent years due to the impact of the COVID-19 pandemic, according to a new brief from the International Labour Organization (ILO).

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Coronavirus disease 2019 (COVID-19) WHO Thailand Situation Report - 22 February 2021

The Thailand labour market update  found that youth employment fell by 7 per cent in the first quarter of 2021 (from the fourth quarter 2019). The youth unemployment rate increased by 3 percentage points for both men and women, reaching a high of 6 per cent and 8 per cent, respectively.

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