The global economy in the middle of 2021 has begun to recover in developed countries. Due to the reopening of many cities, the domestic demand accelerated, but at the end of the year 2021, there was an outbreak of the new variant of the COVID-19 called "Omicron" in more than 90 countries around the world, which caused people as well as investors around the world to be worried about the situation again. The Federal Reserve System (FED) has revised the US economic growth forecast for 2021 to 5.5%. Meanwhile, the International Monetary Fund (IMF) had forecast that the global economy in 2021 would grow by 5.9%, close to the previous prediction of 6.0%, even though it was affected by supply chain disruption. It was offset by commodity exports with higher prices among emerging and developing markets. The global economy in 2022 is expected to grow by 4.9%, with developed economies recovering before emerging markets with lower vaccination rates. As for Thailand’s economy, the International Monetary Fund (IMF) had revised the economic growth forecast to 1.0% and 4.5% in 2021 and 2022, respectively, because the economy is recovering slowly. Furthermore, there is a possibility that many countries may lockdown again, contrary to the accelerating economic recovery period. Moreover, the number of foreign tourists and investors remains low.

 

The risk factors that are the obstacles to exports in 2022 are 1). Concerns over the new variant of the COVID-19 outbreak called "Omicron" 2). The continued shortage of labor in the manufacturing sector and the high cost of employment 3). The issue of logistics and international shipping, container shortage problems, and high freight rates, especially in the EU, the US, and China, because the new container production in the US is declining, the container turnover has been delayed, and inspection measures for container turnover have become more stringent. 4). The issue of raw materials shortages and volatile prices such as semiconductors, steel, and oil cause the manufacturing sector for exports to continually confront the challenges. 5). The world supply bottleneck has occurred because the production was not enough to meet the demand. Meanwhile, the cost of production is increasing, especially in Asia. Moreover, Thailand has to bear the burden of higher costs. The increase in raw materials and imported goods prices, caused by the cost of the shipment and the increase in inflation rate in many countries, have an impact on consumers' purchasing power. Furthermore, it causes imports from major trading partners to slow down (Thai National Shippers' Council: TNSC).

The rubber scenario in 2022 is expected to slow down due to economic factors caused by the COVID-19 outbreak called "Omicron" and volatile crude oil prices in the global market, which tends to increase. According to the Association of Natural Rubber Producing Countries (ANRPC), the world’s natural rubber production is projected to increase by 2.1% in 2021, and the world’s natural rubber consumption is forecast to increase by 8.7% in 2021 and by 8–10% in 2022. Moreover, the Economist Intelligence Unit expects growth in global NR production to rise by 4.9% in 2020 and will increase to 3.3% and 1.8% in 2022 and 2023, respectively. Meanwhile, the world’s natural rubber production is projected to increase by 6.1% in 2021 and will slow down by 3.5% and 2.5% in 2022 and 2023, respectively. In 2021, Thailand’s rubber-based products export outlook (tires, rubber gloves, vulcanized rubber, tubes, rubber bands, etc.) is expected to slow down compared with the last year (in 2020, Thailand exported rubber-based products worth 375,388 million baht, up 7.9%).

 

However, the Thai Rubber Association has a positive attitude towards the rubber market outlook because it has great economic fundamentals, especially the increase in the world's rubber glove demand due to the COVID-19 outbreak in various variants, including the "Omicron" which has been spreading recently. Moreover, the strong collaboration of countries members of the International Tripartite Rubber Council (ITRC), which consists of Thailand, Indonesia, and Malaysia, has rolled out various significant measures that related to each situation. Furthermore, Thai government has rolled out measures to help and relieve the suffering of rubber farmers and entrepreneurs. Moreover, there are other factors that need to be monitored such as Regional Comprehensive Economic Partnership (RCEP), Carbon Border Adjustment Mechanism (CBAM), Electric Vehicle Cars (EV Cars), Digitalization Climate Change, and Sustainability, etc.

 

In conclusion, the Thai Rubber Association strongly believes in the long-lasting relationship and corporation with the concerned sectors i.e., government agencies, private sector, rubber farmers as well as the three largest natural rubber producers, namely Thailand, Indonesia, Malaysia, and other rubber producing countries in the ASEAN to provide strategic direction and solution to falling prices in short term and long term and ultimately to stabilize the rubber prices.

On the occasion of the New Year 2022, I extend to you and your family our warmest greetings, wishing you a happy New Year, your career greater success, your family happiness, and your perfect health and lasting prosperity.

Mr.Chaiyos Sincharoenkul

President

The Thai Rubber Association