Thai industries adjust strategies amid export downturn, eyes new markets
A recent downturn in exports has provoked 25 industry sectors to rethink their production strategies, the Federation of Thai Industries (FTI) has revealed. Key industries affected and readjusting include steel, machinery, construction materials and furniture, all of which significantly cater to the markets in Asia, the European Union and the United States.
The FTI recently unveiled the results of a survey involving 201 company executives and FTI members. The findings showed that of total exports, more than a third (36.2%) were dispatched to Asian markets outside of ASEAN. This was followed by ASEAN (27.6%), the EU (12.4%), and the US (11.4%). Kriengkrai Thiennukul, the FTI Chairman, said…
“The companies are shifting gears in response; some are limiting production while others are reducing work shifts and overtime.”
This strategic shift is linked to a decline in production capacity across these 25 sectors, prompted by reduced demand for overseas goods.
A warning of a potential global recession in 2023 by the World Bank last year, in the aftermath of elevated inflation causing central banks to hike interest rates, has further complicated matters. In May alone, Thailand‘s export value, measured by customs-cleared tariffs, declined for the eighth consecutive month by 4.6%, coming in at US$24.3 billion, according to a report from the Commerce Ministry, reported Bangkok Post.
The FTI anticipates zero growth in Thailand’s exports for this year. In the worst-case scenario, it expects a contraction of 1%. Kriengkrai added…
“The low global economy and the threat of an impending recession have impacted the 25 industries.”
However, the FTI maintains a positive outlook for the last quarter of this year, predicting improved exports. The federation expects the world economy to pick up the pace, spurred by increased business activities surrounding the upcoming Christmas and New Year festivities.
As part of its strategic recommendation, the FTI urges manufacturers to widen their market search to include new territories. Regions like the Gulf Cooperation Council (comprising Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain, and Oman) and South Asia (including India, Bangladesh, Pakistan, Afghanistan, and Sri Lanka) are highlighted as potential markets. Kriengkrai said…
“These markets, with their large populations or high purchasing powers, offer the potential to expand our trade.” He emphasised the importance of thinking seriously about trade expansion towards these countries.
