Thai exports to explore new regions for revival amid worries about China

Thai exports have been contracting for seven consecutive months, causing concerns about their impact on the country's gross domestic product (GDP) for the year.

The export sector, a major driver of the Thai economy, has experienced negative growth for seven consecutive months (October 2022 to April this year) due to the global economic slowdown and high inflation in several countries.

Weakening purchasing power has led to excessive stockpiles in trading partners, resulting in Thai exports contracting 5.2% in the first four months of this year.

To reverse this trend, both the government and private sector see the need to urgently change strategy, as the export sector accounts for nearly 60% of Thailand's GDP.

According to Chaichan Chareonsuk, chairman of Thai National Shippers' Council (TNSC), the Commerce Ministry and the private sector set a target last month to achieve a 1-2% export growth this year. The ministry has facilitated cooperation between commercial attachés and provincial commercial offices, as well as the private sector, by holding joint meetings to assess the situation for the second half of the year and adjust the work plan to drive exports and meet the set targets. They are accelerating 350 activities, targeting seven regions: Asean, China and Hong Kong, South Asia, East Asia and Oceania, Central and South Africa, North America, Latin America, and Europe.

The key strategy involves exploring new markets, maintaining existing markets, and revitalising old markets

Key strategies

Among the key strategies are accelerating the formation of trade representative groups to expand market potential, promoting cross-border e-commerce, negotiating both offline and online business deals, pushing for BCG (Bio-Circular-Green) products and new innovative products, promoting high-value service businesses, particularly digital content, HORECA (hotels, restaurants, catering), 'Thai Select' restaurants, and penetrating secondary markets, especially in Asean and India.

"The negative growth of 4.5% in the first quarter is the lowest point. It is expected to remain negative in the second quarter too, but with a smaller contraction," said Chaichan. “We have started to see some purchase orders coming in towards the end of the second quarter. It is expected that in the second half of the year, Thailand's exports would return to positive growth,” Chaichan said.

Meanwhile, Kriengkrai Thiennukul, chairman of the Federation of Thai Industries (FTI), said that the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) estimated Thailand's exports this year to range from -1% to flat. Previously, it was speculated that Thai exports could reverse in the third quarter or the fourth quarter. However, the recent announcement by the US that they would raise interest rates twice this year indicates that foreign markets are still not performing well, and the persistently high inflation in several countries continues to suppress purchasing power.

Need to seek new markets

"To revive export growth, both the public and private sectors must collaborate to penetrate new markets, such as Central Asia and others and increase trade within Asean," Kriengkrai said. “However, we must now accept that the Chinese economy, which is one of Thailand's major markets, that initially seemed promising, is not showing significant improvement, going by current figures. Their purchasing power is still not that good. We can see more Chinese products flooding Asean markets, as their exports to the United States and Europe have declined due to trade tensions and internal economic issues," Kriengkrai said.

Meanwhile, Phusit Rattanakul Sereroengrit, director-general of the Department of International Trade Promotion (DITP), said that from June to September of this year, the department had conducted 87 activities to boost exports. These included the Thai Food Pop-up Store 2023, featuring food, processed food, beverages, fruits, rice, snacks, seasoning, Thai fruits, and food and beverages in China. They also involved promoting sales in partnership with department stores in Egypt (in-store promotion), expanding the market for fragrant bananas and processed products from Thai fragrant bananas to secondary markets in Japan, and encouraging entrepreneurs in the gems and jewellery industry to target the global market through online platforms of international jewellery and gems exhibitions, among others.

Benefits from tourism recovery

Meanwhile, Poonpong Naiyanapakorn, director of the Trade Policy and Strategy Office, said that the office had analysed this year's export trends for both product categories and markets. The product categories expected to expand this year include food and beverages such as rice, animal feed, whole-grain products, and other processed foods, as well as beverages, chilled and frozen poultry products. Products used in daily life, including cosmetics, soaps, skincare products, blankets, and travel accessories, are expected to benefit from the recovery of the tourism industry. Additionally, medical and health-related products, including medical tools and equipment, following the trends of health and ageing society, as well as electrical appliances and electronic devices, are expected to expand.

The high potential markets for expansion this year are the CLMV (Cambodia, Laos, Myanmar, Vietnam) region, India, and China, while markets with low growth expectations include the United States, Europe, and Japan, due to the economic conditions in those countries. As for export targets, the Middle East is projected to expand by 20%, South Asia by 10%, Asean 6.6%, China and Hong Kong 2%, North America 4.5%, Europe 4%, Japan 2.5%, the United Kingdom 1%, and the Commonwealth of Independent States (CIS) countries 1%, among others.