Declining competitiveness for key export segments such as automobiles has kept Thailand from cashing in on improving global trade, according to analysts, as some start to downgrade shipment projections amid contracting manufacturing output and a slim private investment recovery.
Although global manufacturing sectors have rebounded from Covid-19, Thailand's export-oriented production sectors have yet to return to pre-pandemic levels, largely because outbound shipments have limited adaptability to changing global product demand patterns and long-term supply chain dynamics, according to SCB Economic Intelligence (SCB EIC).
Data on export potential, published by the International Trade Centre, indicated that Thailand's export potential over the next five years will be lower than that of other economies in the region, particularly Vietnam, Malaysia and Singapore, said SCB EIC economist Natnicha Sukprawit.
Thailand has yet to fully realise its export potential, particularly in electronics and machinery. In the long run, the country's export potential lags behind those regional peers, she said.
Consequently, SCB EIC predicts Thai export growth of 3.1% this year, down from its previous forecast of 3.7%, said Ms Natnicha.
Kuala Lumpur-based Maybank shared similar views, noting that Thailand's export recovery remains fragile with automobiles facing tough Chinese competition in overseas markets.
"Goods exports reversed its positive growth in the previous quarter and shrank 2%. In addition to hard disk drives [HDD] and petrochemicals, auto exports were increasingly under strain as Thai-made cars and commercial vehicles saw their market share threatened by China in key Asian export markets, Australia and Europe," Maybank IBG Research noted.
With manufacturing into its sixth straight quarter of contraction, and industrial capacity utilisation at low levels, any protracted softness in export demand could have an indirect effect of delaying planned factory expansions, dampening the nascent recovery in private capital expenditure, according to the research note.
BofA, a unit of Bank of America, stated that competitiveness in Thailand's key export products, including auto, HDD, and key agriculture products such as rice and durians, has been declining.
These products have been disrupted by technological changes, a shift in demand, and more intense competition from abroad that has led to a decline of Thailand's market share in the global market, said emerging Asia economist Pipat Luengnaruemitchai.
"The influx of imports from China has intensified competition, leading to reduced market share for Thai goods globally. This trend is exacerbated by technological changes and shifting global demands that favour other exporters," he said.