OIE pinpoints double risks
Trade war, emerging market dip threats
The Office of Industrial Economics (OIE) has voiced concern about two issues affecting Thailand’s economy in the remaining months of 2018.
The two negative factors are the global trade war, led by the US and China, and capital outflows from emerging markets.
Nattapol Rangsitpol, director-general of the OIE, said the trade war is expected to continue into next year and have negative long-term consequences.
“The side impacts are uncertain, but once the situation is prolonged, the impacts will be widespread and every country will suffer,” he said.
As a result of unstable global trade conditions, capital flows are moving to safe-haven financial markets, spurred by a rising US policy rate.
Capital outflows from emerging markets are pressuring currencies in Argentina, Turkey, Brazil, Russia, Indonesia, India and the Philippines. The currencies’ depreciation is related to panic and a lack of investor confidence, Mr Nattapol said, but the baht remains stable.
He said Thailand’s industrial sector must urgently develop the Siam Model, focusing on Thai-made brands and up-todate products, particularly in the electronics and automotive sectors.
“Thailand is improving S-curve industries, and we need to take advantage of
this development to attract new investors to mobilise our industrial sector,” he said. “Meanwhile, we have to develop our own electric vehicle, as the OIE is studying the feasibility of the Eco EV project.”
Mr Nattapol said one positive issue for the country is the upcoming general election, which will heighten confidence in investment.
In related news, the OIE said the manufacturing production index (MPI) in August rose 0.7% year-on-year to 113.04 points.
The MPI was up for a 16th straight month, while the overall utilisation rate in August stood at 65.9%, helped by sugar, electronic parts, air conditioners, petroleum, pharmaceuticals and chemicals.
For the first eight months of the year, the MPI rose 3.6% year-on-year.
Mr Nattapol expects fourth-quarter MPI to be driven by growth in food, rubber (including tyres) and steel, owing to stronger domestic consumption.
The OIE forecast the MPI for the full year to rise 2.5-3% after an increase of 1.6% to 112.3 in 2017.