State-owned Export-Import Bank of Thailand (Exim Bank) said demand from the United Kingdom for products from Thailand could become depressed in the short term after the UK voted to leave the European Union.
Exim Bank’s business research division in a new assessment said Thai exports to the UK in the near term could drop as Britain navigates its exit from the EU after the Brexit refendum results, a process that could take at least two years. It explained that as the British pound has lost value, demand from the UK for extraneous goods such as auto parts will dip, said a news report from the National News Bureau of Thailand.
Nonetheless, it noted that exports to the UK make up only a small fraction of the nation’s trade and should not have a major impact on the overall economy or industry.
The UK accounts for only 2% of Thai car exports, making the industry resilient to the direct effects of Brexit, said Exim Bank. However, motorcycle exports will likely take a hit, as the UK accounts for 9% of the industry’s global market. Gemstones and jewelry are considered luxury items and will also be affected by currency volatility in the short term.
Another sector to see significant impact is processed chicken, of which 28% of exports go to the UK, as importers will negotiate for lower prices.
In the long term, however, the bank expects the volume of processed chicken and canned sweet corn shipped to the UK to rise once the country exits the EU. Processed chicken is currently regulated by EU trade quotas, and canned sweet corn is subject to EU tariffs.
Canned tuna exports are likely to suffer as well, as one of Thailand’s major canned fish companies had recently acquired a major French producer. Since the UK is a major buyer of canned tuna from France, the two European countries will no longer enjoy bilateral trade benefits once the UK officially leaves the EU.
On tourism, the bank pointed out that British tourists make up only 3.2% of all visitors to the nation, so a reduction in travelers from the UK will not hurt the sector, especially as Chinese and Russian tourist arrivals continue to grow.
Exim Bank said that in the long term, Brexit may be beneficial to Thailand as the UK will no longer be bound by EU regulations, such as import quotas, and will be able to increase trade with Thailand.
Separately, the Ministry of Commerce also played down speculation that Brexit poses a threat to Thailand’s economy. Somkiat Triratpan, director for trade policy and strategy, said the decision will have only a small impact on exports, as shipments to Britain account for only 1% to 2% of total export figures.
Photo: Takeaway
