BoT: US-China rift harm to be indirect
Benefits and costs being mulled
Bank of Thailand governor Veerathai Santiprabhob rushed to ease fears about a trade stand-off between the world’s top two economies, saying it would not directly hurt the country’s macroeconomy as the products under threat of higher US tariffs represent a marginal proportion of the nation’s shipments.
But protectionist US policies could take a toll on some business sectors, manufacturers and export products, he said.
The squabble has benefits and challenges for Thailand, said Mr Veerathai.
Products that could face higher tariffs from the US include steel, aluminium, solar cells and washing machines.
The central bank will continue monitoring the situation, he said.
In part because of fears of a negative impact from a looming trade war, Deputy Prime Minister Somkid Jatusripitak yesterday called a joint meeting with economic ministers and related state agencies, including the Commerce Ministry, Finance Ministry, Bank of Thailand, the Securities and Exchange Commission and the Stock Exchange of Thailand to discuss coping mechanisms.
The Commerce Ministry was appointed at the meeting to study the conflicts’ benefits and disadvantages for Thailand.
“The overall macroeconomics remain intact, although certain foreign media, such as The Economist, say Thailand is on the Japanese path of very low interest rates and low private and public investment,” said Mr Somkid.
“Such a remark is not based on the most recent information, as private investment in Thailand has fared quite well in the first three months of this year, while public investment has normalised after hitting a minor snag last year during the transitional period when enforcing the new Government Procurement and Supplies Management Act of 2017.”
He said the Commerce Ministry was ordered to monitor the trade dispute between the two giant economies, saying it is still too early to evaluate how long the trade dispute will last.
“We have to prepare ourselves on all fronts,” said Mr Somkid. “Certain organisations may not be subjected to direct impacts from the trade war, but the issue may have a indirect psychological impact, as was seen in the stock market tumble last week.”
Commerce Minister Sontirat Sontijirawong said yesterday the ministry is still sticking to its export growth target of 8% this year as the trade dispute between the US and China should have a limited impact on Thai shipments.
Thailand may have a chance to increase exports to the US by between US$300 million (9.38 billion baht) and $1.1 billion, to replace Chinese goods, he said.
It could also export goods worth more than $300 million to China, to replace US products, he said.
The ministry estimates there will be about 50 product items worth $19 million in China’s supply chains, such as mobile phones’ parts and computer parts, that could be affected by the trade dispute.
“Thailand still has a chance to raise exports to the two giant nations, particularly for the group of products that China and the US have engaged in the trade spat over,” said Mr Sontirat.
He said if a trade war happens, Thailand needs to become more cautious and negotiate with the US to exempt Thailand from their trade tariffs.
“We may have to introduce some preventive measures to curb the impact,” said Mr Sontirat. “Anti-dumping and safeguard measures may be needed to protect domestic industries.”