Outlook for Thai food exports next year mixed
By Jon Fernquest |
Thailand's food export industry is concerned that volatility in world currency markets and a possible recession in the US will have a negative impact on the industry.
First, with most experts expecting a weaker US dollar and a stronger baht, more expensive Thai food exports might become less competitive. Of course, Thailand's neighbors such as Vietnam and Phillipines will also be facing a weaker dollar so it's not clear that Thailand will become any less competitive than they will.
Second, if the US economy dips into a recession, which might well happen, then demand for Thai food exports will fall off. Shrimp and chicken exports account for 15% of food exports with the US as a major destination, so the outlook for these items looks a little bleak:
Poj Aramwattananont, president of the Thai Frozen Foods Association, said shrimp exports next year were likely to see flat growth due to the dim economies of major buyers, including the United States and Japan. Only Europe has been expanding, but traders have to find more new markets to offset falling areas.The value of shrimp exports in the first 10 months declined by 2.01% to $1.78 billion, but Mr Poj hoped the value would grow 5% by year-end due to more exports during the festive seasons.
Earnings from chicken exports in 2008 would rise a bit to $1,094 million, from $1,030 million estimated this year.
Not all food exports are facing a bleak future next year:
According to Mr Rachane, next year's exports of fresh, chilled, frozen and canned vegetables and fruit would see double-digit growth thanks to bright prospects for sales to the EU.The performance of major farm crops - rice, rubber, and tapioca - remains strong. Rice exports in particular are doing well, with shipments projected to jump to nine million tonnes next year from about 8.5 million tonnes this year.
The big question remains what, short of tieing the baht to the dollar as Nobel Laureate economist Mundell suggested in a recent Bangkok Post article, can be done to keep the baht from appreciating, at least relative to other competitors in world food markets. (See Mundell article and more Bangkok Post articles on agriculture) (Source: Bangkok Post, 29-11-07, temp-link)
Vocabulary:
volatility - swinging up and down, not stable, fixed, maintaining one value, but changing value often (See Economist Glossary)
a recession - a period of very slow or negative economic growth with rising unemployment (See Economist Glossary)
negative impact - negative effect on, bad things that happen to it
weaker US dollar - value of dollar decreases, worht less
stronger baht - baht with higher value (goes down 34 to 31, for example)
dips - decreases
fall off - decrease
account for -
bleak, looks a little bleak - bad situation that seems unlikely to improve
flat growth - no growth, 0% growth
dim economies - bad economies, with low growth rate
offset - going in the opposite direction of a change and cancelling it
festive seasons - Thanksgiving through Christmas (late November through December)
chilled - made cold
double-digit growth - 10% to 99% (with two digits or numbers)
bright prospects -
projected - predicted to be, people believe it will be
jump - increase suddenly
Nobel Laureate - a person who has won a Nobel prize
appreciating - when a currency increases in value (note this means that the baht to dollar exchange rate (e.g. 32 to the dollar) goes down)
relative to - compared to (the baht appreciates relative to the peso, means that both appreciate but the baht appreciates more)
