The year 2009 was marked by the turbulence of global recession that proved to be both challenging for Thailand and also a reconfirmation of the nation’s inherent strength. The stellar efforts of the Thai government to respond quickly to the economic crisis succeeded in turning the economy around to positive growth in the last quarter of the year. As a result, the 2009 economy declined by only 2.8%, and much better than previously expected.
According to a recently released report by the Office of Industrial Economics, Thailand’s international trade declined along with the slowdown in global trade. From January to October of 2009, Thailand’s international trade had a total value of US$124.1 billion and an import value of US$106.6 billion, with its trade surplus hitting US$17.5 billion.
The OIE report notes however that this year the Department of Export Promotion at the Ministry of Commerce will restructure the export promotion strategy and appoint a “chief of products” to supervise the top 10 export items Those goods account for 85% of Thailand’s total expor value. Three additional “chiefs” will be appointed to shepherd Thai Unique products; those with high export potential; and the third to assist small and medium sized enterprises (SMEs). According to the OIE, “The new strategy is expected to increase the export volume of Thai products by 10-15%, probably reaching 18% in 2010.”
With global declines in the automotive sector and the like decline in consumer spending, motor vehicle, electronics and hard disk drive production contributed to a fall in the Manufacturing Production Index in 2009, but this is expected to see a positive reversal this year, with the MPI forecast to increase by 6-8% in 2010.
In the Electrical Appliance and Electronics Industry, the OIE projects an 18.64% increase year over year in 2010. This is because of an expected y-o-y increase of 22.31% in electronics, and a production acceleration of HDDs, integrated circuits (ICs) and semi-conductors. It should be recalled that Thailand is the world’s leading manufacturer of HDDs and one of the leading IC manufacturers.
The Chemical Industry is also expected to see a better year in 2010, “due to the government’s ‘Strengthening Thai land’ project , increased overseas purchase orders and improvement in the world economy.” Likewise, the Petrochemical Industry saw an upturn in the second half of 2009 due to short term government stimulus measures, but will remain challenged by the world economy, fluctuation in global oil prices and new capacity from other regions.
Iron and Steel are set to strengthen over the coming months, as industry growth will improve when demand reaches a range of 10.98 to 12.57 million tons. Related industries such as auto-motives, set to increase by 5-10% y-o-y, auto parts and electrical appliances in recovery will generate increased demand for iron and steel.
Plastic product exports for 2009 totaled US$2.1 billion, with Japan, the United States, Indonesia and Australia as major export markets. As a supporting industry, plastics should see a rise as economies around the world recover.
Several other industries also will see improvement in 2010. Production in the food industry will see a 2.9% increase in 2010, with a value increase of 9.1% in US dollars. Rubber processing from Thailand will see an increase, as demand from China picks up following a reduction in that country of taxes on some auto models, while the textile and garment industry is looking to receive more orders this year from ASEAN and Japan.
Pharmaceuticals will see continued growth in 2010 and in fact the total production volume of medicines and pharmaceutical products should see a 2009 9.9% y-o-y increase.
The difficult economic waters of 2009 didn’t slow down gems and jewelry either, which saw an annual production increase of 6.25% y-o-y, with export value reaching US$6.48 billion. This year, production costs are further reduced with resolution on the 7% VAT exemption of imported gemstones used as raw materials. This is expected to encourage gem entrepreneurs to import more raw materials, thus polishing Thailand’s luster as a gems and jewelry hub.
Thailand’s economic growth expected to return to 2019 levels in mid-2023
Although the economy would recover next year, the recovery is still substantially below potential level resulting in a large output loss and could affect Thailand’s potential economic growth in the future with the economy expected to return to 2019 levels in mid-2023.
The Siam Commercial Bank (SCB), one of Thailand’s largest commercial banks, said in its latest economic outlook report that the country’s economy may wait until the second semester of 2023 to return to 2019 growth levels.(more…)
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