Min­i­mal harm to GDP seen from trade tiff

FPO weighs pros, cons of US-China dis­pute

Bangkok Post - - BUSINESS / NATIONAL - WICHIT CHANTANUSORNSIRI

The tit-for-tat trade dis­pute be­tween the US and China is fore­cast to have a net neg­a­tive ef­fect on Thai eco­nomic growth of a mere 0.03 per­cent­age points, says a source at the Fi­nance Min­istry with knowl­edge of the Fis­cal Pol­icy Of­fice’s es­ti­mates.

An FPO study found that the US-Sino trade dis­pute would en­tail pros and cons for the Thai econ­omy, the source said.

The trade con­flict will take a slight toll on Thai­land’s ex­ports bound for China, shav­ing 0.11 per­cent­age points off Thai GDP growth, the FPO es­ti­mated.

The row will also cre­ate op­por­tu­ni­ties for Thai­land, how­ever, as Chi­nese in­vestors may use the South­east Asian coun­try as a host for pro­duc­tion and ex­port to the US to avoid tar­iffs.

Thai GDP growth will gain 0.08 per­cent­age points in the event that the coun­try is picked by Chi­nese in­vestors to make prod­ucts des­tined for the US, the Fi­nance Min­istry’s think tank pre­dicts.

Based on these sce­nar­ios, the trade spat will hit Thai eco­nomic growth to the tune of 0.03 per­cent­age points, net, if the rift does not worsen into a full-blown trade war.

The source said the dis­pute presents an op­por­tu­nity for Thai farm prod­ucts, in­clud­ing an­i­mal feed and pork, to re­place Chi­nese ex­ports to the US.

Thai­land’s out­bound ship­ments at the mo­ment are di­ver­si­fied, with 25% to Asean coun­tries, 12.4% to China, 11.2% to the US and 9.4% to Ja­pan.

The FPO has fore­cast that Thai­land’s GDP will grow by 4.5% this year. But Fi­nance Min­istry spokes­woman Ku­laya Tan­titemit said re­cently GDP growth of

5% is pos­si­ble if the global econ­omy’s per­for­mance and state spend­ing out­strip ex­pec­ta­tions.

Som­prawin Man­prasert, chief econ­o­mist and ex­ec­u­tive vice-pres­i­dent of Bank of Ayud­hya, ear­lier es­ti­mated that the net ef­fect from re­tal­ia­tory tar­iffs be­tween the world’s two big­gest economies would be

a mod­est gain for Thai GDP.

Thai in­ter­me­di­ate goods man­u­fac­tur­ers along China’s sup­ply chain, in­clud­ing elec­tri­cal ma­chin­ery and equip­ment and elec­tron­ics and com­put­ers, are ex­pected to feel the pinch from the widen­ing trade spat.

More­over, Thai­land could be­come a dump­ing ground for cer­tain prod­ucts from the two gi­ant economies.

As for win­ners, Mr Som­prawin fore­cast that Thai­land’s agri­cul­tural sec­tor, in­clud­ing cas­sava, fruits, rice, seafood and meat, could take ad­van­tage of the trade tiff, as China would shy away from im­port­ing these items from the US.

PATIPAT JANTHONG

Cargo ships are docked at Bangkok port in Klong Toey district.

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