Although Thailand's overall outward trade to the EU will likely be supported by increased car exports in 2016, our shipments sent there may not be able to resume growth due chiefly to our eroding pricing competitiveness as a result of expiring EU GSP tariff privileges. Exports to the EU will also be pressured by the EU-Vietnam Free Trade Agreement signed recently that will enhance the competiveness of Vietnam, being our major rival in the EU market. Slumping commodity prices will hurt the value of our latex and rubber product exports to the EU, as well.
Another issue that warrants close monitoring is whether the EU will maintain its “yellow card” warning on Thailand vis-à-vis illegal, unreported and unregulated (IUU) fishing, or not, around the beginning of this year. If the EU decides to do so, Thai fishery exports to the EU will continue to be spared from its import ban. Weak purchasing power in the EU continuing from 2015 may undermine our goods sent there overall. Close attention must be paid to any further escalation in terrorist attacks there. If that problem worsens, it may hurt the EU economy, thus requiring further economic stimuli.
Given this, we at KResearch expect that Thai export performance to the EU in 2016 will remain in contraction for another year within a range of (-)1.00 to (-)3.00 percent YoY, which would still be better than the (-)7.00 percent YoY expected for 2015 due to numerous downside risks that have been factored for the year.