There is serious risk that the Thai textiles export industry will shrink by up to 10 per cent this year, due to the recent terror attacks on the US, and the global economic slowdown.

At a Thai Textile Manufacturers Association seminar, president Phongsak Assakul reported on a joint assessment of the situation by Thai exporters, and importers from the US - Thailand's biggest export market for textiles.

The forecasted drop in American consumer spending is expected to impact negatively throughout the fourth quarter. However, president Assakul pointed out that textile exports had decreased prior to the US attacks.

In the first seven months, exports were down 5.2 per cent on the same period last year, from US$3.23bn (Bt142.89bn) to US$3bn, mainly as a result of the economic slowdown. Garment exports had also decreased, by 5.5 per cent to US$910 million.

It was agreed that export plans would need to be revised to cope with order cancellations from the US. It was recommended that manufacturers look at reducing production costs, sourcing new export markets, and concentrate mainly on the domestic market to minimise risk.

A long term issue facing the Thai industry is the coming trade liberalisation in 2005, when export competition will get tougher due to global elimination of import quotas.