20 February 2009
Thailand apparel exports continued resisting competition from other Asian countries in the last year. Tha fall of the baht helped in stimulating sales while large availability of domestic textile materials remained a very strong advantage for Thai producers. The global economic crisis may now affect Thai clothing exports, however, while the elimination of US quotas is dramatically depressing sales to the U.S. market.
Thailand's apparel exports were not significantly affected by the economic crisis in the last year but may now be threatened by a serious slowdown.
According to Thai official data which were compiled by EmergingTextiles.com, apparel exports continued rising 7% in December last year from the same period in 2007, at US$263 million (see our table below).
Exports were clearly weaker over the fourth quarter, however, with a mere 0.62% rise at US$742 million.
Shipments had previously increased by 3% in the second quarter and even 6% in the third quarter.
Although generally experiencing higher labor costs than most other suppliers in Asia, Thailand's apparel industry resisted foreign competition over the past four years.
Apparel exports did not really decline, only losing 2% from 2005 to 2008, at US$3.1 billion.
Exports of yarns and fabrics also remained healthy over the years, reflecting Thailand's main advantage in the textile-apparel market.
With quality fabrics widely available at home in a large varieties of fibers, clothing producers may offer more sophisticated products while keeping costs at a reasonable level.
The level in textile exports reflects the quality of Thai products.
On a total of US$7.27 billion in textile and clothing exports in 2008 (including home textiles), apparel only accounted for 42%.
Thailand's clothing exports may however suffer from the global economic crisis and the elimination of US limits on imports from China.
Exports to the US market obviously fell over the last years, declining 2% in 2006, 6% in 2007 and 8% in 2008.
Still the most important destination of Thailand's exports, the United States only accounted for 46% of total shipments in 2008, from 53% in 2005.
Latest US data are showing a strong fall of 13% in US imports of knit apparel from Thailand over 2008.
Imports of woven apparel were down 18% at the same time.
In January this year, US imports dramatically declined in volume terms from Thailand in most important categories, according to preliminary data.
Imports from China meanwhile surged in these categories.
Thailand however benefited from a 16% decline in the baht in 2008 against the US dollar while the renminbi gained 6.6%.
Clothing exports to the European Union were much stronger in the last year, thanks to the rise in the euro.
In US$ terms, EU clothing imports from Thailand still rose 11% in the first three quarters of 2008.
This is partly due to a surge in imports from Spain while sliding from France and strongly rising from Germany.
The U.K. remains the largest importer of Thai clothing with a rise of 7% over the period.
With the pound heavily falling and a severe crisis in Britain, demand from the UK may fall this year.
Compared with other Asian countries where labor costs are rising, Thailand may however maintain its share of the global clothing market, despite a possible decline in apparel exports in 2009.