The debt crisis in Europe will likely ease only in the short-term, thanks to the International Monetary Fund (IMF) and EU rescue package worth EUR110 billion to Greece, plus a ‘European Stability Package' worth EUR500 billion by the EU, and an IMF contribution of up to EUR250 billion to tame the crisis before it spreads to other countries, such as Ireland, Spain, Italy and Portugal. Nevertheless, concern about debt crisis remains in Europe because of their weak fiscal status caused by the mounting public debt problem and high ratios of fiscal deficits to GDP which will likely affect economic stability of the EU, and pressure their overall economic recovery throughout 2010.
For Thailand, the direct impact on our exports may be limited because the Thai export value to PIIGS (Greece, Ireland, Italy, Portugal and Spain) now facing that crisis is less than 2 percent of our entire export value. KASIKORN RESEARCH CENTER (KResearch) expects that Thai export performance to PIIGS in 2010 may be in a range of -3.0 percent to +3.0 percent YoY.
However, the debt crisis may affect many countries in Europe, particularly the larger ones such as Germany, France and England because Germany and France have found it necessary to contribute money to assist other EU crisis-ridden members, so German, France and England lend money to those members. As a result, their ability to stimulate their own domestic economies may be reduced. Consumption and investment in those countries may decrease, so that the overall economic growth of the region may drop. Then, Thai exports to Europe over the remainder of this year may decelerate from 1Q10 growth.
Low base of last year and relatively high growth of Thai exports to all EU (15) in 1Q10 that has achieved 21.6 percent will help boost Thai export performance to other EU (15) countries (non-PIIGS) this year to show positive growth. It is expected that our exports to other non-PIIGS EU members may grow 3.0-6.0 percent this year. If so, overall Thai exports to all EU (15) members should grow by of 2.0-5.0 percent. In 2010, it is expected that our major exports to those destinations – computers/parts, gems/jewelry, air-conditioners/parts including cars/parts – will decelerate somewhat.
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