Euro crisis to take toll on exports

Aug. 9, 2012 - PRLog -- The study showed that seven sectors - textiles and garments, jewellery and ornaments, electrical and electronics, foods, rubber, automobile parts, and tourism - would be severely affected by the euro crisis as their sales and profits continued to shrink.

SMEs in these seven industries will be the first to be affected as they have low financial liquidity.

The survey showed that shipments of textiles and garments would fall by 10 per cent this year, electrical and electronics exports would drop by 12-15 per cent, food exports would decline by 10-15 per cent, rubber by more than 20 per cent, automobile parts by 10 per cent, and jewellery by 10 per cent, while tourism income is expected to slide because of lower spending by travellers from the European Union.

Vichai Assarasakorn, secretary-general of the Thai Chamber of Commerce and the Board of Trade of Thailand (BoT), said shipments would definitely miss the growth target of 15 per cent this year and might have to be content with single-digit growth.

"Exports of key industries will decline this year and will continue to drop next year. The government should take urgent action to prop up exports and boost the competitiveness of Thai enterprises," Vichai said.

He said the government's measures to set up working committees to drive up exports were inadequate amid the severe impact from the euro crunch.

To boost shipments, the chamber suggested 10 measures from the short to the long term to help the export sector.

The short-term measures included clear steps to support Thai investments in foreign countries, particularly those in the Greater Mekong Subregion; stabilise the exchange rate; review the minimum-wage policy; urgently penetrate European markets that retain strong economic growth and seek new markets to offset dropping exports to the EU; help reduce the costs of production; and accelerate talks on a free-trade agreement with the EU to compensate for cuts in privileges under the Generalised System of Preferences.

In the medium term, it called on the government to develop its logistics system by emphasising cross-border trade facilitation.

In the long run, the government has been urged to join the Trans-Pacific Strategic Economic Partnership with the US to ensure Thai competitiveness with other member states. The government should also promote the development of value-added products, and develop manpower.

Prapee Sorakraikitikul, chairman of the Gems and Jewellery Business Committee of the BoT, said jewellery exports would face a severe drop this year, as shipments have relied mainly on the EU market.

"Some SMEs in the industry have already closed down operations this year because of dropping sales and lower orders from overseas," she said.

Product shipments to the EU dropped by 29 per cent in the first half of this year. However, Prapee expects exports to see a slower decline in the current second half as more orders from the US, the Middle East, and strong economies in the EU have increased slightly this month.

Based on the survey of 800 enterprises, most respondents share similar views that the government has done nothing to promote Thai exports amid the euro crisis and the global economic downturn.

UTCC president Saowanee Thairungroj pointed out that more than 52.3 per cent of respondents said the government had no measures to boost exports after the impact from the EU crunch.

Asked about the impact of the European crisis, enterprises said their profits had started to fall this year, there had been lower purchase orders, and sales had dropped continuously, as had the number of travellers.

The EU crunch has mostly affected the industrial sector followed by the trading, services, and agricultural sectors.

Thanavath Phonvichai, director of the UTCC's Economic and Business Forecasting Centre, said about 50 per cent of Thai enterprises foresaw the Thai economy growing by less than 5 per cent this year.