By PHUWIT LIMVIPHUWAT
THAI EXPORTS contracted in April by 2.6 per cent year on year, hitting their lowest level in 24 months, impacted by the US-China trade war, the Commerce Ministry said yesterday, adding it was setting its sights on replacing Chinese goods in the US market to make up for the decline in shipments.
Exports in April were valued at US$18.6 billion (Bt594 billion).
“The contraction in exports was largely due to the trade tensions between the US and China, which affected various Thai shipments to China,” said Pimchanok Vonkorporn, director-general of the Trade Policy and Strategy Office (TPSO) under the Commerce Ministry.
She was speaking yesterday at a press conference on the state of Thailand’s international trade. The world’s two giant economies have been locked in a bitter dispute over trade in goods and technology. US-China trade tensions showed signs of escalating after a series of retaliatory tariff hikes by the two countries were implemented, starting with the imposition of a 25 per cent tariff by the US on US$250 billion (Bt6.38 trillion) worth of Chinese goods on May 10.
From January to April this year, Thai exports to China have fallen by 8.1 per cent year on year. The drastic fall in shipments has led to a trade deficit of $1.45 billion. In the first four months of this year, Thai exports declined by 1.9 per cent.
Exports of manufactured goods took a serious hit last month from the decline in global trade and the ongoing trade war. Sales of computers and parts fell by 10.6 per cent, automotive and parts fell by 4 per cent and machinery and parts fell by 12.3 per cent.
This is because these manufactured goods are part of the supply chain affected by the tariffs imposed by the two economic powers, the director-general stated.
To achieve flat year-on-year performance in the first four months of this year, Thai exports needed to achieve $20.4 billion, but fell short by almost $2 billion, according to the trade official.
The Commerce Ministry is yet to lower its annual export growth target of 8 per cent for 2019.
Auto industry faces challenges
Automobiles, a key export of the Kingdom, have taken a hit in the past four months as a result of changing market trends. Many countries are importing fewer vehicles from Thailand in favour of importing electric cars from other countries,” Pimchanok said.
For example, Australia used to be a key buyer of Thai vehicles and auto parts in the past decade. However, Thai automotive exports to Australia have been falling this year, as Australia has shifted its emphasis to electric vehicles from other markets, she explained.
From January to April, Thai exports of vehicles, auto parts and accessories to Australia fell by 15 per cent year on year.
“Automotive manufacturers in Thailand will have to adapt to this trend in order to maintain their market share, as electric cars are becoming more popular,” she said.
“Going forward, the TPSO will channel more of Thai exports to the US market, which grew by 25.7 per cent in the past four months. Thai producers will have to be quick in finding key opportunities |to replace Chinese goods in the US market amid the trade conflict,” she suggested.
Goods, which have seen strong growth in the US market, include garments, fruit and household appliances. Meanwhile, Thai goods with strong potential for growth in the Chinese market include agricultural products such as processed foods and fruit.
“However, the increase in the export of agricultural and consumer goods cannot compensate for the losses that the manufacturing sector has suffered as a result of the trade war,” Pimchanok said.
“The Commerce Ministry urges exporters to mitigate risks by entering into long-term contracts with their trading partners to secure their transactions and minimise the uncertainties caused by the trade war,” she said.
By focusing more on long-term contracts, the flow of capital in the Thai economy will also be more stable, helping to reduce the volatility of the baht. Pimchanok predicts the baht will not appreciate to more than Bt31 to the US dollar in 2019.