Garment exporters are now resigned to a contraction of 4 per cent this year, instead of zero or about 2 per cent expansion, due to foreign-exchange losses amid the slow global economy.
Vallop Vitanakorn, an adviser to the Thai Garment Manufacturers Association, said last week that the minimal depreciation of the baht and deflation in the EU were weighing heavily on the industry.
The industry also lost EU import-duty privileges for apparel early this year.
Since many negative factors have hit global economic expansion, the association needs to trim its export target for this year.
The fall in garment exports would be the first in the past few years since the heavy flooding.
Last year, garment shipments were flat at about US$2.9 billion.
The recovery in the United States, which is a major export market for Thai garments, was too slow, while buyers have focused more on Vietnam and other countries with cheaper labour.
The US will have free trade with Vietnam under the Trans Pacific Partnership, so some importers have turned to doing business with Vietnam instead of Thailand.
The government should ensure that the baht moves in line with export rivals. So far, the baht has depreciated the least among Asian currencies.
Exporters have faced losses of about 10 per cent for trading in US dollars and 20 per cent for trading in euros.
General clothes have been hardest hit by the currency problem, while sportswear and brand-name cloth exporters have had less of an impact as they have already bought forward contracts to hedge against currency fluctuations.
According to the association, the US is still the major market for Thai garments, accounting for 30 per cent of exports, followed by the EU for 26 per cent, Japan for 13 per cent and Asean for 7 per cent.