Trump impact limited, CIMB economist says
THAILAND and the rest of Asean will face only an indirect impact from US President-elect Donald Trump’s economic policies, while those policies should not cause an extreme global slowdown or severely hit trade with China, according to an economist.
Amornthep Chawla, head of the research office at CIMB Thai Bank, said Thailand should not worry too much about Trump’s policies as the Kingdom was only a supply-chain country to the United States.
He also said indirect exports to China and Asean nations might be hit indirectly if the US imposes high tariffs on Chinese goods.
“Thailand and Asean should wait and see the clear economic policy [from Trump]. We all are victims of this trade war,” he said. “However, the US should realise that China is the second-largest country after Japan that holds US Treasuries. If Trump goes too far, China can fight against the US by selling its US Treasuries, and that would harm the US economy.
“Moreover, if the US imposes high import tariffs on Chinese goods, it should realise that the cost of production and cost of living of the US will increase, and that would cause the US economy to slow down.”
Amornthep estimated that the value of Thailand’s exports would contract by 0.6 per cent this year, with a slowing of shipments to China and Asean countries. Direct exports to the US will not be affected, he added.
Thai exports to the US account for 11 per cent of its total exports, while the US receives 20 per cent of its imports from China.
Diversification needed
Amornthep said that if the US imposed a protectionism policy, Thailand could do nothing much about that. But he said the Kingdom needed to diversify its markets, and upgrade the quality of goods to ensure market penetration.
Thailand’s policy of |focusing on innovation is the right approach, even though the country does not exactly know how that will pan out, he said.
According to the CIMBT research office, Thai gross domestic product this year is expected to grow by 3.2 per cent, driven mainly by tourism, public investment, upper-income households, the corporate sector and exports.
It said the floods in the South would cause some slowdown to the economy, but overall the economy would pick up in the second half of the year.
Jose Antonio Pedrosa-Garcia, economic affairs officer for the Macroeconomic Policy and Financing for Development Division of the United Nations’ Economic and Social Commission for Asia and the Pacific, said Thailand needed to monitor Trump’s policies closely, along with the fate of the Trans-Pacific Partnership.
