The global and Japanese economies have exhibited slower growth in 2008. It is expected that Japan's economic growth in 2008 will likely drop to 0.8 percent, from 2.1 percent in 2007, which will result in falling demand for imported goods due to weaker consumption and production in the industrial sector. As a result, Thai exports to Japan will be affected. During the economic recession in 2001, Japan reduced imports of several Thai exports, including integrated circuits, computers and related equipment/parts, diodes, transistors, semi-conductors, electrical appliances and related parts, plastic products, iron and steel, etc. So, it is expected that these Thai exports will be hurt this year, as a result of the slowing Japanese economy. However, some Thai export categories, including processed shrimp, plus prepared/preserved/canned seafood will continue to perform well due to steady demand for these Thai food products and JTEPA tariff privileges. The continuing appreciation of the Yen against the Baht since the middle of 2007 has also boosted the competitiveness of Thai goods in the Japanese market.
It is expected that Thai exports to Japan in 2008 will grow 10-12 percent, against the growth of 16 percent in 8M08. This decline will pose a challenge for the Thai government and relevant agencies to find methods and policies to help boost Thai exports to Japan. Recently, the Ministry of Commerce has targeted Thai export growth to Japan in 2009 to 8 percent growth and 15 percent for overall Thai export growth to the world market next year.
Aside from the government's support in resolving the impacts of decelerating export markets, KASIKORN RESEARCH CENTER (KResearch) views that Thai exporters should set business strategies focusing on risk management. They might hedge against financial risks and volatile Baht exchange rates by buying forward FX contracts and seek new, high-purchasing power markets, such as in the Middle East, and some developing countries in Asia, such as China and India, etc.
Also, both Thai exporters and the government should keep an eye on problems resulting from the global economic crisis and Japanese economic deceleration because these problems might affect trade between Thailand and Japan from now into 2009.
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