Thailand: Emerging markets to buoy exports in 2023

Thailand’s exports are expected to maintain growth momentum next year, albeit at a slower pace than this year, shored up by strong demand from emerging markets in Asia and the Middle East, speakers at a seminar said on Thursday.

Speaking at the seminar organised by the Thai National Shippers’ Council, Chaichan Chareonsuk, the council’s president, said it forecast exports to grow by 2-3% next year to US$303-304 billion, easing from an expected 7-8% increase in 2022.

“We strongly believe exports in 2023 will not contract, although the Purchasing Managers’ Index in many countries decreased, especially in the US, sending a message that shippers have to prepare and manage their cash flow carefully,” said Mr Chaichan.

“The sector in the fourth quarter of 2022 may shrink by 3.4% to $69.5 billion year-on-year thanks to tepid demand in Europe and the US,” he said.

For the first nine months of 2022, exports expanded by 10.6% to $221 billion, while imports rose by 20.7% to $236 billion, resulting in a trade deficit of copy5 billion.

Regarding next year’s prospects, Mr Chaichan said exports still have the opportunity to expand in emerging markets in Asia, particularly countries in the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (Bangladesh, Bhutan, India, Myanmar, Nepal and Sri Lanka), Asean, the Middle East and China.

In addition, food exports are expected to remain promising, with growth likely to exceed 5% in 2023 driven by rising global demand.

Thai exporters have to speed up developing products with innovations and their own trademarks to combat a host of risk factors in 2023 including geopolitical conflicts, the global recession, uncertainty over Covid-19 outbreaks, technological changes and environmental factors due to carbon emission regulations.

In 2023, the country’s exporters also need to prepare for currency volatility, with the possibility of the baht appreciating to 34-35 baht to the US dollar from an average of 36 baht now while honing their knowledge of the digital economy and green technology for climate change.

According to Mr Chaichan, there will be no problems with logistics costs in 2023, now that freight rates have significantly declined while the container shortage has eased.

Benjarong Suwankiri, senior executive vice-president of the Export-Import Bank of Thailand (Exim Bank), said 2023 will be a challenging year, mainly due to the looming global recession.

The worldwide recession this time will stem from measures implemented by central banks in developed countries to tame rising inflation, unlike the two previous crises, he said.

He urged exporters to hedge against foreign exchange risk and buy insurance protection for their exports.

Exim Bank forecast the country’s export growth will be at 2% in 2023.

Natiya Suchinda, director of the Agricultural and Industrial Trade Promotion Office under the International Trade Promotion Department, said export markets that are expected to see robust growth in 2023 include India, the Middle East, the US, Asean, China and Hong Kong.