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JUL 2017 FOOD FOCUSTHAILAND
The EUexit trend reflects the risk of ultimateeconomicdisintegration
within the bloc.This issue needs to be considered in lookingat how
the ASEAN Economic Community will move forward. The AEC’s
economic integration is similar to that of the EU,but thedifference is
that
theAEC targets trade,service and investment liberalization,
plus freemovement of skilled labor and capital toallow itsmember
states business flexibility. The AEC does not envisage becoming a
common market like the EU. Therefore,
the EU exit trend may not
affect steps tobe takenby theAEC,but rather trade relationswith
the EUgoing forward.
conditioners, lenses, rubberand rubberproducts,
computers, plus gems and jewelry.Although our
shipment volume to France is relatively small, it
is a major import source of key Thai products,
e.g., machinery, soaps/powdered detergent,
medical/pharmaceuticalproductsandchemicals.
In2016,Thailandsustaineda tradedeficitofUSD
1.25 billionwithFrance.
In summary, greater political clarity inmajor
EU nations, e.g., the UK, France andGermany,
offers the prospect of increased Thai exports
there, inparticularouragro-processingproducts.
Although the export value of such products is
relativelysmall, theywill likelygeneratesubstantial
income for Thai businesses, e.g., in processed
chicken, canned/processed fruit, canned/
processedseafood,pet food,seasonings,wheat-
based products and instant foods. Other major
export categories that may benefit from this
include computers, electrical appliances,
automobiles and auto parts, plus rubber and
rubberproducts, gemsand jewelry,whichshould
grow steadily as their prices are projected to
increase.
Given this,Thai shipments to theEU in1Q17
should recordmuchbetter growthof 8.1percent
YoY, bettering overall Thai export growth at 4.9
percent YoY, buoyed partly by a low 2016 base
and the fact thatprices insomeexport categories
are expected to rise. In addition, since demand
in Europe is recovering, it will likely import a
significant amount of value-addedproducts, e.g.,
computers,automobilesandelectricalappliances,
plus Thai agro-processing products, including
wheat-basedproducts, instant food,pet foodand
seasonings. As the EU market is projected to
resume growth over the remainder of 2017,
KResearch is of the view that our outward trade
to theEUmaygrowat least3percentYoY toUSD
22.8 billion in 2017. This figure, however, might
be revised later, depending on global economic
performance, as well as economic and political
issues in theEU.
