Even as the COVID-19 pandemic continues to take a toll on the global economies like those within ASEAN, Thailand’s recent exportation numbers reveal that the country may slowly be on its way to recovery. Following a 41.59% recorded growth for exports in May, the month of June recorded yet another jump of 43.82% which is valued approximately at 23.69 billion USD. These surprising export figures can be attributed to the resurgence of prominent trading partners located in the United States and Europe.
While the continued productivity of exportation is certainly welcome news, the implications brought forth by such a development can vary, especially when considering that other industries within Thailand are set to struggle because of recently imposed restrictions due to a surge of Delta variant cases.
Role of Factories and Manufacturers
Given the important role that the manufacturing sector plays in the supply chain of exports, the ability to contain outbreaks within these factories is vital to maintaining impressive growth. For example, in June alone, the export value of automobiles and automotive components in Thailand experienced a growth of 79%; a figure which contributed heavily to the previously mentioned exports value of 43.82%.
So far, attempts to protect factory workers in Thailand have been difficult. As reported by Reuters, employees in more than 1,500 factories have been struck by COVID-19. One such manufacturer is an automotive firm, who in July announced a temporary halt in production across three Thai factories. In line with this, businesses in four major manufacturing industries have experienced the most difficulty, specifically food, electronic parts, automotive parts, and textiles. As a result, the Thai National Shippers’ Council has predicted that losses from August to December could total as much as 9 billion USD.
Part of the reason why Thailand continues to experience strong export numbers is that Thailand’s currency, the baht, has been depreciating. Thus, expenses and costs related to exports have greatly reduced, which may partially explain the boost in the Thai exportation sector. While this is beneficial for the sake of exports, the depreciation of the baht is concerning as it is an indication of other industries struggling amid the pandemic.
One such sector is tourism, which previously accounted for 20% of Thailand’s gross domestic product (GDP). Furthermore, the baht’s depreciation is expected to continue as the Delta variant’s presence greatly reduces the country’s hopes of re-opening its once bustling tourism sector.
Beyond this, the baht’s performance relative to the dollar should also be an important consideration. As reported by Nikkei Asia, during the last week of July, the baht’s value depreciated to 32.9 per dollar. Given that the baht’s value continues to diminish, small to medium enterprises (SMEs) and large corporations alike are set to suffer, which is concerning as it could deter investors.
Although Thailand’s strong export numbers have been a key bright spot in their economy, further steps should be taken to ensure that related industries will thrive in a post-pandemic world. By doing so, it may potentially increase the central bank’s revised 2021 growth rate of 1.8%. Taking the necessary steps to address the spread of COVID-19 stands to benefit both the economy, as well as Thai citizens’ health and well-being.
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