The Sept 11 attacks exacerbated the slide of the US economy into recession, prompting the Export Promotion Department and the Bank of Thailand to slash earlier export projections.

As a result, exports in 2001 are likely to be worth US$65 billion, down from $69.8 billion in the previous year.

For the first 10 months of this year, the country's exports were worth $54.7 billion, a 5.1% decline year-on-year.

Imports in the first 10 months rose 2% to just over $52.2 billion, leaving the country with a trade surplus of $2.4 billion, down 61.3% from a year earlier.

Other Asian nations shared Thailand's fate to an even greater extent. Taiwan's exports plummeted by 16.9% in value between January and October. The Philippines posted a decline of 13.8%, South Korea, 11%, Malaysia 8.35%, Indonesia 6% and Hong Kong 3.6%.

China was the only country that maintained growth, a rise of 6.3% in the period, but year-on-year it recorded a fall of 0.04% in September.

The World Trade Atlas reported that imports by the United States fell by 0.6% in the first half of 2001, compared with growth of 21.7% in the same period of 2000.

In particular, imports of electronic products, computers and components declined by 6% to $23 billion, circuits fell by 20% to $15 billion and components dropped by 12% to $13 billion in the first half of 2001.

The United States is the largest export market for Thailand, accounting for one-fifth of total shipments. From January to October this year, Thai exports to the US shrank by 9.9% to $11.1 billion.

Among the top 10 export categories to the United States, six declined, led by electrical circuits, computers and accessories, footwear and parts.

Suchart Chantaranakaracha, president of the Thai Garment Manufacturers' Association, said garment exports had slumped in the US market and contributed to an 8% fall in the country's total garment exports to $3.1 billion in 2001.

Shrimp exporters are preparing more value-added products including ready-to-eat dishes, reflecting the greater attention being paid to market research.

Mr Suchart, also the managing director of Gold Mine Garment Co Ltd, said the prospects for garment exports in 2002 were not good, but his own company projected growth of 8% for 2001.

"The company's development plan is bearing fruit, as I have invested more than 70 million baht in the past few years to upgrade machines, cut production costs and produce high-quality products," he said.

Exporters of shrimp and gems and jewellery are following the same strategy.

Paiboon Ponsuwanna, the president of the Thai Frozen Foods Association, said most shrimp exporters had moved to produce more ready-to-eat food. The export ratio of value-added shrimp products was expected to increase from the current 35% of total export value to 40% in 2001. Shrimp exporters have paid more attention to market research to meet consumers' needs.

Industry analysts said that most Thai gem and jewellery exporters should be applauded for their marketing success in the United States, despite formidable odds.

They have developed new channels to distribute their products, such as through the Internet, home shopping networks, department stores and direct sales.

Exports to Thailand's other major markets also recorded contractions in the year to October: 2.2% to the European Union, 3.9% to Asean and 1.1% to Japan.

With the current global economic uncertainty, the Thaksin Shinawatra government has adjusted macro-economic policy to move away from the heavy reliance on exports and foreign direct investment that had shaped growth for two decades.

Instead, the premier has implemented a stimulus package to boost local consumption at the grass-roots level.

"It's pretty difficult to change the country' s economic structure overnight. Imports combined with exports equal 120% of GDP," said Sompob Manarangsan, an economist at Chulalongkorn University.

Analysts argue that although the government is seeking to market products made under the one-tambon, one-product programme, it would take years for those products to develop an international profile and meet the quality standards needed to penetrate export markets.

Other measures to diversify economic strategy include expanding exports to non-traditional markets such as China, India, Bangladesh, upper Africa and the Middle East. The goal is to raise the value of exports to these markets to 40% of the total from 30% in the next three years.

Sparkling exports: A diamond necklace and golden jewellery.

In addition, the government plans to accelerate food exports to reach its target of 12% of total export value in the next three years, from the current 8%.

State agencies, led by the Finance Ministry and the Export-Import Bank of Thailand, have agreed to soft loans totalling 12 billion baht to small and-medium enterprises to ease their cashflow problems.

Mr Sompob said, however, that the government had done too little to help the export sector recover, and he predicted that 2002 would be another tough year.

He advises the government to promote sectoral exports by first thoroughly studying ways to improve the performance of the country's top 10 export sectors.

He projected export growth in 2002 would be between 2% and 3% in baht and dollar terms, based on the most optimistic scenario that the US economy would pick up in the third quarter.

"I think Thai exporters will not enjoy the benefit of a weak baht in the year ahead because it may remain unchanged next year, standing at between 43 and 44 against the US dollar," he said.

Kiet Sittheamorn, a director of the Board of Trade of Thailand, agreed, adding that the government should take the offensive in negotiating with trading partners to eliminate non-trade barriers.

He said that using such barriers to protect national interests was becoming increasingly prevalent. For example, the United States imposes dumping duties on steel, the EU has developed tougher food safety standards, and Australia has imposed high quarantine standards on farm goods.

However, hopes remain for more free trade, with the successful agreement in November to open a new round of negotiations under the World Trade Organisation.

Garment exports to the United States fell sharply in 2001 and prospects for the industry in 2002 are not encouraging.

In addition, prices of farm products in the world market are expected to increase and reflect real prices as developed countries eliminate farm-price subsidies.

The accession of China to the WTO is also significant for the global trading system, as it is the world's third-largest economy and the 10th largest trading power.

China will add $130 billion (5.7 trillion baht) to world trade and by 2010 will account for 15.5% of the world's GDP.

As a WTO member, Beijing promises to lower import tariffs on 136 product items for Thailand, of which 51 are agricultural and fishery products while the rest are industrial goods. The tariffs are to be cut from to an average of 13.1% from the current 37.6%.

"The freer market in mainland China might boost the farm sector including rice, sugar and tapioca," Mr Sompob said.

Agricultural exports rose 9.7% between January and October, and were worth $5.9 billion. Shrimp, tapioca products, frozen and processed chicken recorded growth but rice exports declined in value while rising in volume.

Exports of industrial goods, in comparison, contracted by 7%, to $40.3 billion, agro-industrial goods fell by 14%, to $4.1 billion, and minerals and fuel declined by 11.5%, to $1.7 billion.

Given the dependence of Thailand's exports on the American economy, a US-led recovery, particularly in the information technology sector, will be crucial to the global economy and to the local export sector in 2002.

Thailand's electronic and electrical appliance exports, account for around 20% of total export value, and recorded a sharp drop in the January-October period.

But businesspeople in the IT industry argue that the current downturn is likely to bottom out in the second half of 2002.

The Electronics and Computer Employers' Association has forecast 30% growth for the industry in the second half of 2002, compared with the same period this year.

Yuthana Hemungkorn, the association chairman, said the period between cyclical downturns and upturns averaged three to four years and the outlook for the industry would take on a V shape next year.

For other products, exporters are also optimistic about a slight improvement in 2002, particularly shrimp producers and automobile and parts manufacturers.

But canned pineapple exports, facing anti-dumping duties, are forecast to record negative growth, while garment exports are projected to record zero growth.

At the end of 2002, another ominous sign that may shake export prospects next year was the declining growth of imports used in making export products, led by automobiles and parts, which fell by 6.3% to $1.5 billion, and raw materials and intermediate goods, which dropped by 1.5% to $15 billion.

The government is hoping that history will not repeat itself. In 1998 exports fell by 6.59% in line with a drop in imports of 32.84%, largely because the country relies heavily on raw material imports to manufacture goods for export.