Thailand's exports are likely to shrink by as much as 500 billion baht this year due to the Covid-19 pandemic, trade wars and the US-Iran conflict, leading the country's outbound shipments to contract by 7%, the worst showing in 10 years, according to a university study.
Aat Pisanwanich, director of the Center for International Trade Studies at the University of the Thai Chamber of Commerce, said that under the worst-case scenario in which the coronavirus crisis exceeds nine months (beyond September), the UTCC forecasts exports to contract by as much as 7.1% this year, with export value shrinking US$17.42 billion or 557.72 billion baht.
"We expect that the worst-case scenario is 50% likely to occur," Mr Aat said. "The forecast is based on assumptions of a global economic contraction of 2.5%, the baht trading at 31 to the US dollar, no progress in trade dispute negotiations between the United States and China, a prolonged Covid-19 outbreak, crude oil prices of $20 per barrel, conflict with the US and Iran and the widespread drought ending before May 2020."
The impact of the outbreak alone is expected to cause Thai export value to shrink by $13.48 billion, Mr Aat said. Asean is forecast to see the biggest decrease in export market value, down by $5 billion, followed by Hong Kong (down $4 billion), Japan (down $3 billion), China (down $2 billion), Europe (down $1 billion) and the US (down $1 billion).
Thailand's exports to the China market are projected to drop by 1.2-13.5% this year to $24.5 billion-$28 billion, the lowest in six years. As much as 80% of export products from Thailand are raw materials, with finished products (35.7% of which are fruits) making up 20%.
Agro-industrial products are expected to see the most impact from the coronavirus crisis. The outbound shipments of this sector may decrease by 5.4-30% or $299 million. Risk products include vegetable oil, canned and processed fruits, canned and processed vegetables, beverages, and canned and processed seafood.
Likewise, agricultural exports are expected to fall by 8.3-22% or $1.33 billion, largely because of stringent inspection procedures to prevent virus spread. Risk products include chilled and frozen boiled and fresh shrimp, edible vegetable oil, chilled and frozen fresh fruits, and rice.
Industrial export products may decrease by 0.1-14.2%, with the highest decline estimated at $2.75 billion because of the outbreak's severe impact on the Chinese manufacturing sector.
Industrial exports at risk include automobiles and parts, electrical circuits, machine and parts, plastic pellets, and chemical products.
Key factors resulting in Thailand's export contraction with China include decreasing income of Chinese citizens and the ban on foreigners entering the country.
Mr Aat suggested Thai exporters seek partners to make use of online grocery sales in both the domestic and foreign markets. Exporters should have cost-sharing with clusters to reduce production cost, expand the domestic market, improve machines and upgrade labour skills and packaging.
In a separate development, Somdet Susomboon, director-general of the International Trade Promotion Department, said that despite the spreading coronavirus the department sill sees promising export prospects for five essential product sectors: daily use products; medical products; health products; home entertainment; and intermediate industrial products like auto parts and appliance components.
