Over the first eight months of 2021, Thailand's cross-border trade including transit trade saw a progressively brighter outlook, thanks to last year's low base, higher purchasing power and energy prices. Export value during the period reached THB 682.184 billion, rising by 38 percent YoY,. This growth came mainly from transit trade, which increasingly appeals to Thai exporters due to strong purchasing power and demand for a variety of products, especially from Singapore, southern China, Vietnam, among others. While shipments via transit trade grew 61.1 percent year-on-year, the growth of border shipments with Malaysia, Myanmar, Lao PDR and Cambodia, which now stands at 22.2 percent YoY.
Going forward, Thai exports should enjoy considerable growth from cross-border trade to third countries, or transit trade, especially to southern China – which recently ranked first in market value, boosted by overland fruit shipment to China which has become increasingly popular. Thai fresh fruit exporters should prioritize the quality standards of their products, as the Chinese government has imposed stringent import requirements at its border through fruit inspection under Good Agricultural Practices (GAP), sorting and packing processes that are required to meet the standards of Good Manufacturing Practices (GMP), control over levels of contaminants and checks for impurities in fruits.
KResearch assesses that Thailand's cross-border trade including transit trade may grow sluggishly over the remainder of 2021, owing to the fading low base effect and signs of economic recovery from COVID-19 Delta variant outbreaks in many countries. Southern China has shown more positive signs than other markets, making it a key driver of Thailand's cross-border trade including transit trade throughout 2021, which is projected to grow at least 28 percent YoY, reaching an all-time high at THB 980 billion. In the best-case scenario wherein the COVID-19 situation improves and consumers' purchasing power of Thailand's trading partners increases rapidly and there are no hiccups for shipments to southern China over the remainder of the year, the Thai exports to southern China in 2021 may reach THB 1.02 trillion, growing 33 percent. It would mark the first time in history that the value of Thailand's cross-border trade exceeds THB 1 trillion.
In the forthcoming period, the southern Chinese market will undoubtedly emerge as Thailand's biggest border trade market. This is reflected by the value of Thai exports to southern China in 2021 that has overtaken that of Malaysia for the first time ever. The launch of the Laos-China high-speed railway on December 2, 2021, will elevate cross-border logistics between Vientiane, Luang Prabang, Luang Namtha, and Kunming, transforming a difficult overland route through mountainous terrain into a fast and convenient transport route. This new development would provide Thai exporters an alternative in shipping their products to Yunnan province in China, in addition to the R3A route that has been predominantly used for shipments. Going forward, Thai exports to Yunnan province could potentially lead to even higher export growth to southern China. Presently, Thailand's export growth is mainly derived from shipments to the autonomous region of Guangxi, which account for a massive 82 percent of total transit trade to southern China.