Trump’s trade war antics start worrying Thailand

Moves of the US administration to impose new tariffs and duties on a variety of imported products leaves Thailand worrying about its potential to continue profitable business with one of its most important trade partners.

According to Bank of Thailand Senior Director Don Nakornthab, who was interviews by Bloomberg News, trade politics is the most important factor for the country’s economy whose GDP depends by 70 per cent on the export of goods and services. Any protectionist measures by large trade partners could easily evolve into trade war, Nakornthab said.

“If there’s an external shock in the near future, our economy may face a difficult time,” he noted.

US President Donald Trump’s plan to impose tariffs on steel and aluminum imports roiled markets as investors weighed the possibility of escalating trade confrontations. In addition, Thailand could face greater US scrutiny after its trade surplus with the world’s biggest economy exceeded $20 billion last year.

Overall, Thailand has been lucky to be able to “rely on external demand while we wait for local demand to gain more strength,” Nakornthab said. The economy is in the early stages of an upswing and expansion in 2018 could be higher than last year.

However, Thailand’s GDP advanced 3.9 per cent in 2017, lagging peers in Southeast Asia. Vietnam and the Philippines posted growth rates exceeding six per cent.

The overall picture is that the country still needs accommodative monetary policy to facilitate economic expansion and bring inflation back to target.

The Bank of Thailand is also grappling with the challenge of currency appreciation. The Thai baht has appreciated about 12 per cent against the dollar in the past year which puts pressure on exports.

The Southeast Asian nation boasts of one of the largest current-account surpluses among emerging markets globally. The central bank is counting on its $213 billion reserves to cushion currency volatility, which has led the International Monetary Fund recommending that Thailand could use parts of this surplus for social welfare, particularly funds for the elderly, among others.

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Moves of the US administration to impose new tariffs and duties on a variety of imported products leaves Thailand worrying about its potential to continue profitable business with one of its most important trade partners.

Moves of the US administration to impose new tariffs and duties on a variety of imported products leaves Thailand worrying about its potential to continue profitable business with one of its most important trade partners.

According to Bank of Thailand Senior Director Don Nakornthab, who was interviews by Bloomberg News, trade politics is the most important factor for the country’s economy whose GDP depends by 70 per cent on the export of goods and services. Any protectionist measures by large trade partners could easily evolve into trade war, Nakornthab said.

“If there’s an external shock in the near future, our economy may face a difficult time,” he noted.

US President Donald Trump’s plan to impose tariffs on steel and aluminum imports roiled markets as investors weighed the possibility of escalating trade confrontations. In addition, Thailand could face greater US scrutiny after its trade surplus with the world’s biggest economy exceeded $20 billion last year.

Overall, Thailand has been lucky to be able to “rely on external demand while we wait for local demand to gain more strength,” Nakornthab said. The economy is in the early stages of an upswing and expansion in 2018 could be higher than last year.

However, Thailand’s GDP advanced 3.9 per cent in 2017, lagging peers in Southeast Asia. Vietnam and the Philippines posted growth rates exceeding six per cent.

The overall picture is that the country still needs accommodative monetary policy to facilitate economic expansion and bring inflation back to target.

The Bank of Thailand is also grappling with the challenge of currency appreciation. The Thai baht has appreciated about 12 per cent against the dollar in the past year which puts pressure on exports.

The Southeast Asian nation boasts of one of the largest current-account surpluses among emerging markets globally. The central bank is counting on its $213 billion reserves to cushion currency volatility, which has led the International Monetary Fund recommending that Thailand could use parts of this surplus for social welfare, particularly funds for the elderly, among others.

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