Private sector fears trade war hit on exports next year 

Economy August 08, 2018 01:00

By   THE NATION

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THE nation’s peak private-sector advisory grouping has voiced fears that the escalating trade conflict between the United States and China could harm the export sector – a standout performer in the Thai economy – next year.



Predee Daochai, chairman of the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB), said the committee has been closely watching developments in the trade conflict and other potential issues in the global economy. The trade tensions have so far had only a limited impact on the world economy and in Thailand, Predee said

If the US sets out a new list of targets - both in terms of the particular Chinese goods and the tariff rates - for possible retaliation, Thai exports could come under pressure and regional currencies may depreciate amid a period of volatility that would likely follow a weakening in the Chinese yuan, he said.

Damaging floods in the West and the Northeast are also being monitored. However, they may not give rise to the severe impacts that were seen in 2011 when floods devastated the Central and Northern regions – home to most of the country’s industrial estates.

The economy has been driven mainly by exports and tourism, with expansion of private consumption and investment, Predee said. The country's farm incomes have turned positive and this trend has helped to sustain purchasing power at the grassroots level.

The JSCCIB is maintaining its forecast for growth in the economy this year in the range of 4.3-4.8 per cent, with expansion in exports of 7-10 per cent. Inflation is projected at 0.9-1.5 per cent.

Exports are estimated to grow 5.5 per cent to US$129.99 billion in the latter half of this year; this would be lower than the 12 per cent growth posted for the second half of 2017.

For the whole year, the value of shipments is expected to grow 8.1 per cent to $255.8 billion, said Aat Pisanwanish, director of the University of the Thai Chamber of Commerce (UTCC)'s Centre for International Trade Studies.

The UTCC centre forecasts economic growth in the range of 4-6.9 per cent this year, with exports expanding 7.3-8.9 per cent.

Aat cited the growing global economy and the likely depreciation in the baht against the US dollar for the projected rise in exports. The baht is estimated to average 34 to the US dollar this year.

However, risks are present with the trade war and the likely depreciation in other currencies against the US dollar, as well as the projected increases in global crude prices that could affect production costs, and falling prices of agricultural products.

“In the latter half of the year, crude prices are expected to rise as a consequence of the US sanctions imposed on Iran,” Aat said.

“If the situation escalates, crude prices are expected to increase to US$80-$90 per barrel. We've also monitoring the US-China trade war and a retaliatory plan to raise tariffs on US automobiles.”