Flare-up in US-China trade conflict risks deepening slump in exports
A POTENTIAL escalation in the US-China trade war may send growth in Thai exports spiralling down below 3 per cent in 2019, compared with expansion of more than twice that last year, the nation’s peak private-sector advisory grouping said.
“Currently we maintain our prediction that Thai exports will grow between 3 and 5 per cent in 2019, a decrease from last year’s 6.7 per cent growth,” Supant Mongkolsuthree, chairman of the Federation of Thai Industries (FTI), said at a press conference held by the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) yesterday.
On Sunday, US President Donald Trump tweeted: “For 10 months, China has been paying tariffs to the USA of 25 per cent on US$50 billion of High Tech, and 10 per cent on $200 billion of other goods. These payments are partially responsible for our great economic results. The 10 per cent will go up to 25 per cent on Friday. $325 billion.”
The projection of 3 to 5 per cent growth in exports is based on the assumption that the trade war will not escalate drastically in 2019. Supant conceded, in an interview held while the JSCCIB event was in progress, that if the trade war does worsen, then the sub-3 per cent expansion could happen. This was because many Thai exports are part of the supply chain affected by the tariffs that the US has imposed on China, said Supant, whose FTI is part of the JSCCIB.
Pimchanok Vonkorpon, director-general of the Commerce Ministry’s Trade Policy and Strategy Office, said exports will be affected if the US further increases its tariffs on Chinese goods to the threatened 25 per cent. Products such as meat, fish and seafood, fruits, coffee, tea, and flavouring products would be among those affected, she said in a separate interview.
The JSCCIB predicts that, faced with these pressures, the economy will grow between 3.7 and 4 per cent this year, with tourism and investment as the key factors driving expansion.
“Investments, in particular, are expected to increase significantly after the second half of this year. After the new government is established, we expect that foreign investment in the country will increase and public investments in key mega-infrastructure projects will continue,” Supant said.
For Thailand to cope with the trade war, Supant urges the private sector to attract diverted investment from China into the Kingdom. The public sector should step up its efforts to further integrate the country within the Asean region, especially with Thailand’s role as the chair of the regional bloc this year.
The FTI has called for the digitisation of trade windows in the region to reduce costs for exporters. This is in line with the government’s goal of completing the Asean Single Window (ASW) for all 10 Asean members.
