The Exporters Council is concerned about the strong baht, fearing losses, and is calling on the Bank of Thailand to maintain the stability of the baht and prevent it from appreciating too quickly, while also supporting tools to help entrepreneurs.
Mr. Chaichan Charoensuk, Chairman of the Thai National Shippers’ Council (TNSC) or the Exporters’ Council, said that exports in the remaining 4 months of this year are very challenging, especially the baht situation, which has appreciated by 12% in the past 3 months, affecting the profits of entrepreneurs, which have decreased to the point of possible losses. The export groups of agricultural products and agro-industrial products will be greatly affected, and entrepreneurs must prepare for such situations, such as taking out exchange rate risk insurance and negotiating with trading partners about using local currencies. As for the economic stimulus measures of the Chinese government, they will help increase purchasing power in China in the medium and long term and
will benefit Thai exports, but they may not be effective quickly. It is expected that we will have to wait until the first quarter of 2025, and they will indirectly help solve the problem of the influx of Chinese products.
The House of Representatives also set this year’s export target at 1-2%, with the assumption that if exports are to expand by 1%, exports must be pushed to an average of 22.7 billion dollars per month in the first 4 months. However, if exports are to expand by 2%, exports must be pushed to an average of 23.4 billion dollars per month. In addition, important risk factors to watch out for in the final stretch of the year include:
1) The baht has appreciated significantly, directly affecting exports due to a decrease in price competitiveness, coupled with the lack of access to credit by entrepreneurs, which has an ongoing impact on business liquidity.
2) Geopolitical issues are still difficult to predict. The Middle East war situation is still ongoing.
The US election may clearly result in
polarization and cause volatility in the global supply chain. Meanwhile, the US will start safeguard measures on September 27, 2024 for electric vehicles and parts, solar panels, while in 2025, the measures will be implemented for rubber gloves, chips, and others. As a result, China must quickly distribute products to new markets and potential Asian markets.
3) The Manufacturing PMI has continued to contract, despite continued demand, concentrated in the electronics group.
4) Problems with maritime freight transport. Shipping rates continue to decline on several major routes, but they are down from previous highs due to the Red Sea situation, except for the United States route due to strikes by port workers on the east and west coasts, which have caused ship delays.
5) The flooding problem in the northern part of Thailand, especially the agricultural sector, may be severely affected and have a continuing effect on the cost of raw materials and the insufficient amount of agricultural products released to th
e market in the next phase.
Important recommendations:
1) Maintain the stability of the baht to prevent it from appreciating too quickly, and support tools and fees for hedging exchange rate risks to help entrepreneurs.
2) Consider reducing the policy interest rate to an appropriate level.
3) Consider reviewing the increase in the minimum wage in line with the current economic situation so as not to be too much of a burden on entrepreneurs, especially SMEs. 4
) Expedite trade negotiations and new trade cooperation both at the national level and at the level of important economic regions of each trading partner country. -511
Source: Thai News Agency