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18 Mar 2009


Thai Plastic Product Exports, 2009: Signaling Contraction… Adjustments Needed (Business Brief No.2457)

The export value of plastic products in 2008 grew 12.0 percent over 2007, thanks to 13.3 percent higher value and 0.8 percent higher volume. However, these exports signaled a deceleration in 2H08 and this has continued into 2009. The export value of plastic products in January showed a high contraction of 16.8 percent YoY, due largely to falling purchasing orders. Also, high prices for these products cannot be set during economic recession. Risks that should be watched this year include contracting sales due to the expectation that the global economy will fall into a more severe recession than in 2008, and tight credit policies by commercial banks hampering liquidity. However, the government's economic stimuli, including low–interest loans for the business sector – particularly for SMEs – and tariff measures for exporters, should support the plastics business. KASIKORN RESEARCH CENTER (KResearch) expects that the export value of plastic products will likely contract 7.0-12.0 percent in 2009.

Regarding the outlook for plastic product exports, it is expected that packaging products will continue to grow because they are used in our everyday life. Garments and plastic accessories may post some growth because of tariff privileges as part of the JTEPA. Nevertheless, demand for plastic products to be used in the production of electrical appliances and electronic parts – as well as automobile parts – will drop due to the global recession. Because these products are semi-durable goods, consumers might postpone their purchase of these products amid the adverse economic situation. Flooring and walling tiles, decorative items and plastic furniture exports are expected to decelerate because of the sluggish real estate sector domestically and internationally, and the lower purchasing power of both domestic and foreign consumers this year. All in all, consumer demand must change during this critical period. Consumers might turn to products with reasonable quality and price, so manufacturers should introduce new products that accommodate lower consumer purchasing power amid the global crisis.

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