Thailand to benefit from growing import momentum in China, India

The forecast is consistent with an increasing global shift whereby traditionally export-driven emerging markets are becoming global trading hubs, decoupling their previous dependency on developed markets to become important engines of global economic growth in their own right.

China and India are major trading partners with most of their neighbouring countries – not least Thailand. "Substantial import growth in these two biggest Asian economies offers considerable opportunity for Thai companies to grow their international business," said Juthamas Ruangvanish, senior vice president for global trade and receivables finance at HSBC Thailand.

China’s growth in imports will overtake the value of its exports over the next five years, with growth rates of 5.1 per cent and 4.7 per cent respectively. This is because demand for imported goods and commodities will continue to grow, while demand for exports to developed markets will decline.

At the same time, India will serve as Asia’s fastest-growing exporter/importer, with annualised rates averaging 5 per cent and 7 per cent respectively.

Specifically, China is important to Thailand, as exports to that market in the first five months represented 12 per cent of the Kingdom’s total shipments, and have become greater than Thai exports to the European Union. China’s substantial import growth will act as a major catalyst to boost Thai exports during the second half of this year.

Thailand’s import growth reflects a similar trend, due mainly to reconstruction efforts resulting from last year’s record floods as well as new investment. According to Ministry of Commerce data, Thai exports for the first five months totalled Bt2.85 trillion, edging up 0.8 per cent year on year, while imports totalled Bt3.19 trillion, up 14 per cent. Exports in May alone totalled Bt641.14 billion, up 10.7 per cent year on year, while imports totalled Bt703.03 billion, up 21.4 per cent.

"With its export-driven economy, we remain confident that Thailand is on track for a near-term robust recovery. There is an increasing trend among major Thai companies to make use of their production bases in neighbouring countries, shift production to value-added products, or focus attention on improving efficiency. In so doing, they are able to meet the challenges presented by increasing costs and competition for international trade," Juthamas added.

HSBC’s "Global Connections" reveals that 10 of the Asia-Pacific region’s top 15 trading partners are countries within the region, with the trend expected to gain momentum until 2026. Nine of China’s 15 largest import partners, and six of its fastest-growing partners up to 2016, also are in Asia and the Pacific. Similarly, the six fastest-growing export destinations for India up to 2016 are in either Asia or the Middle East.

Brazil appears in the top 10 high-growth export destinations for every Asia-Pacific market in the forecast. In the next five years, Brazil is expected to become this region’s fastest-growing export partner and second-fastest-growing import partner, with annualised growth rates of 10 per cent and 9 per cent respectively. Specifically, Brazilian exports of iron ore to China are forecast to increase by 11 per cent annually up to 2016. The report also shows that Latin America’s top five fastest-growing import partners up to 2016 are India, China, Thailand, Indonesia and Singapore.

Automobiles have been identified as a key global growth sector. In Asia, imports of cars are predicted to grow at 6 per cent annually up to 2016. Supporting this growth, Chinese car imports are predicted to expand 12 per cent annually up to 2016, mirroring its demographic wealth trends. India is the region’s fastest-growing car exporter, with an annual growth forecast of 13 per cent. HSBC forecast a 10.05-per-cent growth rate annually up to 2016 for Thailand’s vehicle exports, while annual export growth for car accessories is estimated at 7.38 per cent. Imports of engines from Japan are forecast to increase by 6.86 per cent.

Alongside its strong production base, Thailand has buoyant commodity and infrastructure sectors.

Exports to China of vulcanised and non-vulcanised rubber are forecast to increase annually by 15.99 per cent, and those of raw rubber gum by 7.31 per cent, up to 2016. Thailand itself imports iron and steel to support its own rapid infrastructure development and the trade forecast predicts Thailand’s role in supplying resources to the Asia-Pacific region is growing in momentum.

Additionally, Thailand’s consumer-electronics sector is substantial, increasingly innovative and successfully adding value to products. To take advantage of the opportunities this sector offers for international trade, businesses need to grow at about 5 per cent annually over the next five years.