Bangkok--29 Mar--KASIKORNBANK
KResearch has assessed the trade policy of the US and global trade situations. Although the US has implemented various trade protectionism measures that produce different impacts on trade partners and product types, there are certain flexibilities that may limit the overall impacts and lead to trade negotiations with each trade partner of the US. Therefore, the situation will not likely escalate into a trade war.
However, the US's latest protectionism which will cost around USD60 billion in Chinese imported products may indirectly affect supply chains and exports of the East Asian region including Thailand. Over short-term, Thai exports at risk may include computers accessories and parts, electrical appliance 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 U.S. criteria on exchange-rate manipulation. This implies that the Thai policymakers may have their hands tied in maneuvering the foreign exchange policy, which may prompt Thai Baht to rise swiftly and be in a volatile course. It is also possible that the US may implement protectionist measures against Thai-made products. The situation thus merits close watch.
Amid risk of a global trade war, KResearch maintains its export growth forecast for 2018 at 4.5 percent, given that Thai shipments posted a double-digit growth in January and February. The uptick was seen in major Thai export categories and markets, suggesting that our outward trade is largely supported by global demand. If this factor continues during the remainder of 2018, it is expected Thai exports will grow perhaps over 4.5 percent in 2018 (forecast in December 2017).
The US's decision to slap import tariffs in washing machines, solar panels, steel and aluminum, which have already been effective, plus its plans to raise import tariffs on Chinese goods worth some USD60 billion, beginning from the middle of May 2018, and pressure on further rise in the Baht value if Thailand is labeled a currency manipulator are issues that warrant close monitoring ahead. Given this, KResearch has decided to keep its export growth forecast steady at 4.5 percent.
KResearch expects the Thai economy to grow 4.0 percent in 2018, driven by exports, tourism and investment amid risk factors in global trade. Export sector continues to expand, thanks to steady world economic expansion. Tourism and public & private investments will be catalyst for Thai economic growth. The enforcement of the Government Procurement and Supplies Management Act may, to a certain extent, delay the disbursement of the government's investment budget, but an acceleration of budget spending during the remaining period of this fiscal year is projected to give a boost while the private investment should benefit from the government's investment projects.