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Monday, June 17, 2024

Thailand’s Export Competitiveness Declines Amid Global Trade Rebound

Thailand’s struggle to capitalize on the improving global trade scenario, particularly in crucial export sectors like automobiles, is impeding its competitiveness, as highlighted by analysts. Despite the global rebound in manufacturing post-Covid-19, Thailand’s export-oriented industries are yet to regain their pre-pandemic momentum. This is primarily due to their limited adaptability to evolving global demand patterns and supply chain dynamics, notes SCB Economic Intelligence (SCB EIC).

According to data from the International Trade Centre, Thailand’s export potential in the coming years is projected to be lower compared to regional counterparts such as Vietnam, Malaysia, and Singapore. SCB EIC economist Natnicha Sukprawit emphasized that Thailand still falls short in fully realizing its export potential, especially in electronics and machinery, lagging behind its regional peers in the long term.

As a result, SCB EIC forecasts a modest export growth of 3.1% for Thailand this year, down from the initial projection of 3.7%. Maybank, headquartered in Kuala Lumpur, echoed similar concerns, highlighting the fragile nature of Thailand’s export recovery, particularly in the automobile sector facing stiff competition from China in key Asian markets, Australia, and Europe.

Maybank IBG Research noted a reversal in positive growth for goods exports, with a 2% contraction in the previous quarter, attributing this decline to challenges faced by Thai-made cars and commercial vehicles in retaining market share against Chinese competitors. Moreover, prolonged softness in export demand, coupled with ongoing contraction in manufacturing for six consecutive quarters and low industrial capacity utilization, could further delay planned factory expansions, thus dampening the emerging recovery in private capital expenditure.

BofA, a unit of Bank of America, observed a declining competitiveness in Thailand’s key export products, including automobiles, HDD, and agricultural staples like rice and durians. Emerging Asia economist Pipat Luengnaruemitchai pointed out that technological advancements, evolving demand patterns, and intensified competition from abroad, particularly China, have eroded Thailand’s market share globally. This trend is exacerbated by shifting global demands favoring other exporting nations, posing significant challenges for Thailand’s export-driven economy.

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