Limited impact on Thai economy from trade war
WITH PRESIDENT Trump following through on his protectionist campaign promises, issues of trade wars dominate global economic agenda in the past several weeks. As the world's largest and second largest economies intensify their rhetoric, global trade is at risk.
We attempt to gauge the impact of US-China trade spat on Thailand's economy by analysing the list of products that would be subject to import tariff in both countries. As part of China supply chain, the most vulnerable part of Thailand's exports includes rubber and products, computer and parts, chemicals, auto parts, integrated circuits and electrical appliances. Taken together, they worth around US$14 billion or almost 6 per cent of total exports in 2017. Some of these products will be re-exported to US, while the others will be for domestic use or re-exported to other countries. We use OCED data to gauge the extent to which China re-export these products to US, and find that Thailand exports would likely be hit by 0.66 per cent. Finally, we estimate the impact on Thai GDP by using the value added to GDP by each industry and conclude that negative impact on Thai economy would be limited to 0.17 per cent of GDP.
On the bright side, as China plans to retaliate with tariff on US goods, Thailand could gain from increased exports to China. China tariff list includes pork, fruits and nuts, soy bean, wine and steels. For fruit and nuts, Thailand's products are very competitive and are popular among Chinese, they account for 3.0 per cent of total exports to China in 2017.
Contributed by Wilanda Disorntetiwat, economist at TISCO Economic Strategy Unit. She can be reached via www.tiscowealth.com or [email protected].
