KResearch sticks to 4.5% export growth forecast amid risk of trade war
Although the United States has implemented various protectionism measures that will have varying impacts on trade partners and product types, certain flexibilities may limit the overall impacts and lead to trade negotiations with each partner, KResearch says after assessing the global situation.
The situation will not likely escalate into a trade war, it said on Thursday.
However, it said, Washington’s latest moves, which will cost around $60 billion in Chinese imported products, may indirectly affect supply chains and exports in East Asia, including Thailand.
In the short term, Thai exports at risk may include computer accessories and parts, electrical appliances and mobile-phone components – which are major products within Chinese supply chains.
Furthermore, Thailand is also at risk of being on the list of US trade partners meeting US criteria on exchange-rate manipulation.
This implies that Thai policymakers may have their hands tied in manoeuvring foreign-exchange policy, which may prompt the baht to rise swiftly in value and take a volatile course.
It is also possible that the US could implement protectionist measures against Thai products. The situation merits close monitoring.
KResearch maintains its export growth forecast for 2018 at 4.5 per cent, given that Thai shipments posted double-digit growth in January and February.
The uptick was seen in major export categories and markets, suggesting that Thailand’s outward trade is largely supported by global demand.
If this factor lasts for the remainder of 2018, it is expected that Thai exports will grow perhaps more than 4.5 per cent.
KResearch has decided to keep its export growth forecast steady at 4.5 per cent, given the US decision to slap import tariffs on washing machines, solar panels, steel and aluminium, already in effect, its plans to raise import tariffs on Chinese goods worth some $60 billion beginning in mid-May, and anticipated pressure on the baht if Thailand is labelled a currency manipulator.
KResearch expects the Thai economy to grow 4 per cent in 2018, driven by exports, tourism and investment, amid risk factors in global trade.
The export sector continues to expand, thanks to steady world economic expansion. Tourism and public and private investments will be catalysts for Thai economic growth.
The enforcement of the Government Procurement and Supplies Management Act may, to a certain extent, delay disbursement of the government’s investment budget, but an acceleration of budget spending during the remaining fiscal year is projected to give a boost, while private investment should benefit from the government’s investment projects.