Thailand's latest export figure in January 2021 grew at a mere 0.3 percent YoY. Excluding gold, exports rose by 6.3 percent YoY, which reflected the recovery of Thailand's trading partners, thanks to the commencement of COVID-19 vaccinations which have started to rejuvenate global economic activity, contributing to the bright prospects of Thailand's annualized export growth at 4.5 percent in 2021 (within the projected range of 3.5 – 5.5 percent). Shipments to China and the US performed better than other markets, while overall exports have also shown improvement, especially for key products which have played a major role in economic activity the new normal era, including IT merchandise and surgical gloves, both of which continue to grow from the previous year. Both essential and durable goods matched consumption patterns and made a positive turnaround consistent with surges in purchasing power and prices of commodities. As a result, exports of related products such as refined oil, chemicals and plastic pellets are helping to drive this year's export growth.
Nonetheless, this positive sign may be only temporary, since export growth can be primarily attributed to a low base of 2020 and the coincidence of Thai exports now being particularly sought after in the global market. Moreover, the structure of the Thai export market at present may not be conducive to sustainable growth. Approximately 40 percent of Thailand's major exports rely on foreign investors – especially electronic products like integrated circuits (ICs), diodes and hard disk drives (HDDs) which normally generate much income for the country. However, Thailand is now losing its manufacturing edge, further reducing the chance of attracting new foreign investment to finance the export industry, going forward.
Thus, the main challenge for Thai exporters will remain the establishment of a firmer domestic production base to expedite the sustainable growth of Thai exports, particularly outstanding agricultural products (rice, rubber and cassava), processed foods, chemicals and plastic pellets; most of which are now exported as raw materials or intermediate products with low value added. Upgrading of Thai products and manufacturing industry through the adoption of advanced technology would make Thailand an attractive investment destination, especially in products which fare better than those of competitors. Thus, these issues should be addressed urgently, in order to propel Thai exports towards sustainable growth.
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