Thai exports to the European Union, comprising of 27 member countries (EU27) during 7M10 saw growth of 24.1 percent YoY, after contracting (-) 30.5 percent YoY during the same period of last year. The main driver for the improvement was better economic growth in the EU during 1H10, especially in light of brighter economic growth in the EU's key trading partners during that same period.
Many major export markets for Thailand are found in the EU, e.g., Germany, France, Italy and the UK. Over the remainder of this year, KASIKORN RESEARCH CENTER (KResearch) forecasts that Thai exports to the EU may falter due to an unstable economic recovery amid numerous risk factors, especially in PIIGS (Portugal, Ireland, Italy, Greece and Spain). Meanwhile, the four largest economies in Europe, as major Thai export destinations, are expected to slow in 2H10. Additionally, the continued Baht's appreciation that has been comparatively more pronounced than that seen in other regional currencies may also undermine our trade competitiveness.
As a result, the overall Thai exports to the EU in 2010 may record growth in a range of only 10-15 percent. Among our exports that may face an uphill task in the EU would be gems, jewelry and garments that are largely dependent upon purchasing power and consumer confidence. Meanwhile, food products are expected to see continued growth despite more intense competition. Thai exporters should thus place emphasis on marketing adjustments and product redesign to bolster our competitiveness in the EU.
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