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Thai National Shippers' Council (TNSC) Forecasts 2-5% Export Growth in 2023, with 2022 Likely to Reach 9%

November, 10 2022

Key factors to monitor include a global economic slowdown, which is expected to be mild compared to Q4 2022, a weakening Thai baht, estimated to range between THB 36-38 per USD, and rising costs from oil prices, electricity, and wages. However, oil prices are expected to decline, averaging around USD 90 per barrel. Additionally, freight rates on major shipping routes are declining, and although raw material price volatility remains, the semiconductor shortage has eased somewhat, though it still requires close monitoring.

For 2022, Thai exports are expected to grow by 8%, with the possibility of reaching 9% if Q4 exports continue expanding and no major disruptions occur. However, achieving a 10% growth rate would require stronger economic and export growth, which is considered a moderate to low possibility.

Key Growth Drivers for 2022

1. The Thai baht remains weak, benefiting Thai exporters that rely on local raw materials (Local Content), particularly for markets such as the U.S. and the Middle East.
2. The global food crisis has boosted exports of chilled, frozen, and processed chicken, as well as canned and processed foods, particularly to the EU and the UK.

Major Risks and Challenges for 2022

1. Inflation in key trading partner countries continues to rise, especially in the U.S., prompting strict monetary policies by the Federal Reserve (FED) and global central banks. This has led to slower economic activity due to higher financing costs and a stronger U.S. dollar, as capital flows into the U.S. amid rising interest rates.
2. Manufacturing PMI (Purchasing Managers' Index) in major markets like the U.S., Europe, China, and South Korea has shown signs of contraction in September-October 2022.
3. Energy prices remain high due to the prolonged Russia-Ukraine conflict and OPEC+’s plans to cut oil production, which is driving up production costs in both industries and households worldwide.
4. Raw material shortages and price volatility, affecting commodities such as wheat, corn, sunflower seeds, and fertilizers.
5. Semiconductor shortages have improved, but supply is still insufficient for sectors reliant on chips, such as electronics, home appliances, and automobiles. Additionally, the U.S. CHIPS and Science Act of 2022 is putting pressure on China’s advanced semiconductor supply chain.

Thailand’s International Trade Data for September 2022

• Exports: USD 24.92 billion, up 7.8% (equivalent to THB 888.37 billion, up 16.4%).
  (Excluding gold, oil, and military goods, exports grew by 9.0%).
• Imports: USD 25.77 billion, up 15.6% (equivalent to THB 929.73 billion, up 24.7%).
• Trade Deficit: USD 853.2 million (THB 41.36 billion).

Overall Trade Performance for January-September 2022

• Total exports: USD 221.37 billion, up 10.6% (equivalent to THB 7.52 trillion, up 21.3%).
  (Excluding gold, oil, and military goods, exports grew by 8.6%).
• Total imports: USD 236.35 billion, up 20.7% (equivalent to THB 8.15 trillion, up 32.3%).
• Trade Deficit: USD 14.98 billion (THB 624.79 billion).

Key Recommendations from the Thai National Shippers' Council (TNSC)

1. Accelerate Free Trade Agreement (FTA) negotiations with key partners such as Thailand-EU and Thailand-UK, as well as other secondary markets to boost export competitiveness and attract long-term foreign investment.
2. The Bank of Thailand (BOT) should maintain an appropriate policy interest rate to support business recovery and prevent excessive financial burdens on consumers and businesses.
3. Optimize regulations on transshipment, and increase awareness among stakeholders to establish Thailand as ASEAN’s Logistics Hub, attracting more direct call shipping routes, thus reducing logistics costs and enhancing export competitiveness.