Exports this year are likely to contract by between 1.2% and 2.5%, the lowest level in three years, according to the latest forecast by the University of the Thai Chamber of Commerce (UTCC).
Aat Pisanwanich, director of the Center for International Trade Studies at the UTCC, said the country still has to brace for plenty of risk factors in the remaining months of the year, with the critical factors to monitor including uncertainty from the delayed formation of the new government, global economic conditions, fluctuating exchange rates, China's lower than expected GDP growth, higher unemployment rates in trading partner countries and foreign exchange volatility due to the US Federal Reserve's high interest rate policy and rising trend.
Furthermore, the impact of the El Niño weather phenomenon is expected to deliver a heavy blow to agricultural exports and global crude oil prices may adjust upwards due to the reduction in production capacity by oil-producing countries.
In addition, Mr Aat said other risk factors which warrant close monitoring include higher production costs in Thailand compared to other Asean countries, such as electricity costs, other forms of energy and the daily minimum wage, along with global inflation or disinflation, geopolitical conflicts and the prolonged Russia-Ukraine war, as well as the de-dollarisation factor that could affect exports.
Disinflation is a temporary slowing of the pace of price inflation and is used to describe instances when the inflation rate has reduced marginally over the short term.
"The slowing trend of the global economy will have implications for exports this year and next. China and the US are likely to experience disinflation due to reduced purchasing power. In response, Thailand should diversify its export markets away from China, particularly to markets which contribute fewer than 5% of the country's total exports, such as the Middle East, Africa, Brazil, Russia, Central Asia and India," he said.
According to Mr Aat, China's economic structure still faces several issues, including conflicts with the US, the property crisis and a high unemployment rate of up to 30 million, particularly among the industrial workforce as the current trend for the young jobseekers in China is shifting towards technology and IT rather than working in the industrial sector.
The Indian market may potentially serve as a replacement for the Chinese market since it has a comparable size, he said.
The university forecasts exports to have an estimated value of US$138 billion in the second half of this year, up by 0.3% from the same period last year.
According to the Commerce Ministry's latest data, exports fell by 5.1% year-on-year in the first five months of this year to $116 billion, while imports dipped by 2.5% to $123 billion, resulting in a trade deficit of $6.36 billion.