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9 Jun 2009

Industry

Thai Electronics Exports: Recovered? (Business Brief No.2528)

Thailand's electronic exports that have exhibited positive signals during the past few months were due largely to restocking and readjustments by exporters to distribute their products to new markets, instead of traditional markets, such as the USA and Europe that have experienced deep economic contractions. In addition, some export markets, such as China, have shown signs of improvement due to their effective economic stimuli.
With these positive factors, KASIKORN RESEARCH CENTER (KResearch) believes that this deepest slump in Thai electronic exports ever has bottomed out. It is expected that the export contraction will slow in 2Q09 and 3Q09 and might show growth in 4Q09 due to a low base effect (the export value at the end of 2008 was quite low). It is expected that Thai electronic exports in 2009 will total USD 27.992– 26.437 billion, dropping 10-15 percent from 2008.
However, KResearch views that a Thai export recovery will face some risks because more purchase orders to replenish inventories should be only short-term. Also, economic stimuli introduced by many countries, e.g., subsidies, are temporary measures. Although they will benefit manufacturers and exporters, the effectiveness of those measures in offsetting economic contractions in the global market are limited. Also, the restructuring of multinational corporations will lead to declines in the number of suppliers in the global market, thus putting pressure on costs that will affect Thai manufacturers and exporters, particularly SMEs, because commodity prices will increase.

As a result, exporters should be more careful about marketing plans. They should also enhance their flexibility and swiftness in procurement, production improvement, logistics and delivery management. Unnecessary costs should be cut. Exporters should also monitor global economic conditions, evaluate market trends and look for new market opportunities arising from economic stimuli, expanding sales in new potential export markets and domestic market in order to maintain sales.

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