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26 Apr 2017

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2017 Exports to the EU Driven by Agro-Processing Products (Business Brief No.3675)

 The first-round results of the French presidential election were as expected by the market. Although Emmanuel Macron did not get a majority of the vote, resulting in him having to compete in a second-round election against Marine Le Pen, he is the favorite to win because his independent centrist stance and policies are in line with French political culture.

The current political situation in France is helping ease pressure on the EU economy somewhat prior to German federal elections scheduled for 4Q17, wherein the results should not be much of a surprise, either, nor should the British Prime Minister's call for a snap general election threaten the EU economy, given that the new government, as expected, will likely go ahead with a hard Brexit to take the UK out of the EU. Nevertheless, close attention must be paid to political developments in Italy and Spain since they want to leave the EU, too.

Greater political clarity in many key EU nations now offers the prospect of higher Thai exports to the EU, in particular our agro-processing products. Although the export value of such products is relatively small, they will likely generate substantial income for Thai businesses ahead, e.g., in processed chicken, canned/processed fruit and seafood, pet food, seasonings, wheat-based products and instant foods. Other Thai products that may benefit from this include electrical appliances, computers, cars, rubber/rubber products, plus gems and jewelry.

Given this, Thai shipments to the EU in 1Q17 should record much better growth of 8.1 percent YoY, buoyed by a low 2016 base and the fact that the prices on some export categories are expected to rise. In addition, since demand in Europe is recovering, it will likely import significant amount of industrial and agro-processing products from us.

As the EU market is projected to resume growth over the remainder of 2017, we at KResearch are of the view that our outward trade to the EU may grow at least 3 percent YoY to USD22.8 billion in 2017. This figure, however, might be revised later, depending on global economic performance, as well as economic and political issues in the EU.

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