Can Thai fruit restore economic health?

Can Thai fruit restore economic health?

Thai mangosteen is popular with Chinese consumers. Photo: Yingyong Un-anongrak
Thai mangosteen is popular with Chinese consumers. Photo: Yingyong Un-anongrak

Thailand's fruit exporters are anxiously hoping that the worst effects of the Covid-19 outbreak will soon be over, as otherwise fruit sales will become another casualty of the virus. Fruit exports have been a star performer for Thailand over the past couple of years, driven mainly by demand from China. In 2018 Thailand's fresh fruit exports to China rose by almost 50% to 700,000 tonnes, and in the first half of last year they rose by a further 123%.

Thai durian enjoyed the largest export volume, accounting for about half of all fruit exports, followed by longan, mangosteen and young coconut. Indeed, the sector was doing so well that in some months the value of Thai fruit exports exceeded those of automobiles. In the first 10 months of last year, the value of Thai fruit exports reached US$3.2 billion, making Thailand the world's sixth largest fruit exporter, after Spain, the Netherlands, Mexico, the US and Chile.

Thailand is currently the third largest fruit exporter to China after Vietnam and Malaysia. All have been beneficiaries of the US-China trade war following the imposition of a 30% tariff by China on US fruit. Southeast Asia's fruit growers have filled the gap and exports to China from these three countries have soared.

China allows Malaysia to export 10 kinds of fruit, including longan, mangosteen and lychees, while Vietnam can export nine kinds of fruit including dragonfruit, mango and rambutan.

Not surprisingly, the Covid-19 epidemic has hit exports of fruit from the region as people in China have been confined to home amid a sombre national mood and dramatically lower economic activity. Malaysian durian exporters are among the victims of this demand shock, having been left with an oversupply and which has seen prices plummet.

In Thailand's eastern provinces -- the biggest producers of durian and mangosteen -- the fruit is still ripening on the trees as the main season is from April to July.

With Covid-19 infections levelling off in China and winter coming to an end in the northern hemisphere, there are now predictions that the outbreak should be contained by the middle of the year. If that is the case, the whole world will be breathing a sigh of relief.

Bangkok Bank's economics unit takes the view that the outbreak should be contained around June or July. If so, Thailand's major fruit exporters may avoid the fate of their Malaysian counterparts. And, given the fruit industry's contribution to Thailand's exports, that should also provide a much-needed tonic for Thailand's economy.

Suwatchai Songwanich is an executive vice-president with Bangkok Bank. For more columns in this series please visit www.bangkokbank.com


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