By THE NATION
The bank report that global export value has contracted for the first time in three years. In the first half of 2019, global exports shrank by 2.8 per cent or US$268 billion and Thai exports by 2.9 per cent or $3.6 billion, partly as a result of the US-China trade war which has caused a slowdown in exports of most of Thailand's trade partners in Asia and Europe.
Faced with a sluggish domestic economy, Thai exporters should diversify their export destinations to new market countries or regions with continued economic growth and little dependence on exports to the US and China.
In addition, they should also put in place a long-term plan to invest in S-curve industries which would help add more value and boost competitiveness of Thai exports of goods and services as well as relieving effects of the trade war that may be prolonged.
The bank's president Pisit Serewiwattana made the point that the extended US-China trade war has resulted in global trade shrinkage for the first time in three years.
According to the World Trade Organization's recent findings, in the first six months of 2019, overall global exports shrank by 2.8 per cent or $268 billion, representing 0.3 per cent of global GDP.
Thailand’s main export markets, the US and China with 11 per cent and 12 per cent also felt the impact with export contraction of 2.9 per cent or more than $3.6 billion.
In the first half of 2019, US imports from Thailand expanded to substitute for those from China due to higher prices of Chinese goods in the face of import duty hikes, resulting in an increase in Thai exports to the US by 17 per cent.
However, the overall Thai economy, which is driven principally by exports representing more than 55 per cent of GDP, was inevitably affected by the slowing economies of most of Thailand's trade partners. And Thailand isn’t feeling the impacts as much as many other countries that rely heavily on exports of goods in China's supply chain.
In addition, countries that rely more on the US market than the Chinese market are less affected, such as Mexico, Canada, Vietnam, India and Philippines, while countries that depend heavily on the Chinese market, especially South Korea with 27 per cent of total exports going to China recorded an $25 billion contraction in export.
A short-term solution for Thai entrepreneurs is to expedite diversification of export markets to new frontiers in Asia, Africa, Middle America and Latin America, particularly the CLMV (Cambodia, Lao PDR, Myanmar and Vietnam) where purchasing power has increased in line with their consistent economic growth.
Pisit further said that in the long run Thai entrepreneurs need to adjust themselves by expanding investment in S-curve industries, such as investing in Eastern Economic Corridor (EEC), or businesses using new innovations, which would enhance Thai entrepreneurs' competitive advantage on the global market, and enable them to survive and thrive amid global economic uncertainties, be it the prolonged trade war or new forms of trade measures.
The 10 target or S-curve industries promoted by the government to drive the economy comprise next-generation automotive industry, intelligent electronics, health and wellness tourism, advance agriculture and biotechnology, food processing, robotics, and so on.
"The prevailing trade war represents only one aspect of international economic and political uncertainties, which can weigh on several countries including Thailand,".
"There are ways for Thai entrepreneurs to weather these difficulties such as being forward-looking in terms of product and market development, starting from production technology development, innovation, and increase in product and service value propositions, as well as ongoing exploration and creation of new business opportunities even in new unfamiliar markets,"
"EXIM Thailand is fully equipped to work with both the public and private sectors to create new trade and investment opportunities for Thai entrepreneurs who are ready to compete in the international trade arena," Pisit added.