Bank of Thailand warns of economic recession

Thailand's export sector has lost competitiveness in global markets, with the market share of rice shipments falling by more than 50 per cent over the past 20 years, according to the Bank of Thailand (source: thailand.go.th)

Bangkok - Thailand's export sector has lost competitiveness in global markets, with the market share of rice shipments falling by more than 50 per cent over the past 20 years, according to the Bank of Thailand (BoT).

Obstacles in the export and manufacturing sectors are having a more discernible impact on the Thai economy, the central bank said in the latest report.

It noted that among the products that dented export value growth last year, more than 70 per cent recorded declining competitiveness and other structural headwinds.

According to the edited minutes of the BoT's Monetary Policy Committee (MPC) meeting on February 7, agricultural products such as rice reported a lower market share, from 25 per cent in 2003 to 13 per cent at present. Petrochemical products and hard disk drives were also facing many challenges.

Thailand's electronics export growth averaged only 4 per cent over the past decade, well below its regional peers such as Vietnam, the Philippines and Malaysia, which posted export growth of 37 per cent, 14 per cent and 10 per cent, respectively.

Manufacturing of goods sold domestically also faced more intense competition from imports. The share of imports from China increased from 5 per cent to 9 per cent over the same period.

In related news, Deputy Commerce Minister Napintorn Srisunpang said on February 22 that Thailand needs to diversify its agricultural exports as it currently relies on a handful of items and only a few overseas markets.

He cited data that showed the country’s top five farm products constituted over 87 per cent of its agricultural exports, while as much as 42 per cent of Thai farm products were exported to China.

Napintorn suggested that Thailand should diversify its agriculture export products and markets to help reduce the risk from too much reliance on a handful of export products and markets.

He pointed to the need for expanding agricultural output through research and technology as well as restructuring exports from the farm sector to ensure a diversity of products, and exploring new export markets while retaining existing markets like the US, China, and the Association of Southeast Asian Nations (ASEAN) countries.

Thailand’s agricultural exports totalled 49.2 billion USD last year, representing 17.3 per cent of all Thai exports with a total value of 284.5 billion USD.

He cited data released by the Commerce Ministry’s Trade Policy and Strategy Office which shows that farm produce accounted for 9.4 per cent and processed agricultural products 7.9 per cent. The deputy minister noted that the agricultural sector represented only 9 per cent of the country's total gross domestic product (GDP), while farmers make up 46 per cent of Thailand’s population.

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