Thailand Faces Economic Challenges Amidst US Trade War

Economic experts warn that Thailand must navigate the challenges posed by the US trade war, which threatens global economic stability. Key strategies discussed include fortifying internal consumption, managing currency reserves, and leveraging ASEAN partnerships. Additionally, proposals for government actions emphasize the importance of adapting trade relations and mitigating risks through strategic planning.

Thailand is currently facing significant challenges as a result of the United States’ escalating trade war strategies, largely attributed to the policies of former President Donald Trump. Experts have convened to address these issues at the panel discussion titled “Trade War 2025: How to Deal with Trump?”. Economic leaders have expressed concerns about the potential for a severe economic downturn if tariff wars continue unchecked, warning that nations such as China, Canada, and Mexico could face dire consequences from the rising tariffs.

Don Nakornthap, Bank of Thailand’s Reserve Management chief, spoke on the urgent need for Thailand to fortify its economy against such pressures. He emphasized building domestic economic resilience through increased internal consumption, effective management of foreign reserves, and proactive engagement in regional trade partnerships within ASEAN. Thailand’s growing trade surplus with the US necessitates such measures to soften the impact of impending duties on exports.

Kobsak Pootrakool, chairman of the Federation of Thai Capital Market Organisations (FETCO), indicated that trade volatility is already evident, accompanied by a declining Dow Jones and Nasdaq indices. He warned of a challenging environment for investors, with assets fluctuating under the influence of Trump’s policies. Kobsak characterized the situation as a prolonged “storm” lasting the next four years, urging stakeholders to prepare accordingly for persistent instability.

Dr. Kirida Bhaopichitr from the Thailand Development Research Institute articulated the broader implications of the trade war, underscoring its negative effects on global economic growth. As trade-related challenges increase, countries like Thailand, heavily reliant on exports which make up approximately 60-65% of its GDP, could face heightened difficulties. Nevertheless, Dr. Bhaopichitr identified some opportunities arising from this volatility, including potential growth in imports from countries like China, which may help offset some challenges.

Industry leaders, including Kriengkrai Thiennukul from the Federation of Thai Industries (FTI), recognized the scrutiny under which Thailand is placed due to its substantial trade surplus with the US. He called for enhanced governmental engagement with the US, particularly as negotiations shift from multilateral to bilateral discussions. Kriengkrai warned that ongoing tariffs could threaten vital sectors, such as aluminium exports, necessitating strategic market reevaluations and new partnerships.

To navigate the trade landscape, Pisan Manawapat, a former Thai senator, put forth actionable proposals for Prime Minister Paetongtarn Shinawatra. These include understanding Trump’s trade strategies, bolstering relationships with both the US and China, and committing to significant purchases of US goods to strengthen diplomatic ties. Manawapat emphasized the importance of maintaining a balanced approach in engaging with these two major economies.

Dr. Piti Srisangnam analyzed the geopolitical consequences of the trade war, particularly concerning China’s rising influence. The potential for further tariffs and trade barriers could disadvantage Thailand in competing for relevant markets. Two potential scenarios were detailed: one predicting stark competition and less favorable conditions should tensions escalate (“elephants colliding”), and the other suggesting that a diplomatic resolution may lessen tariff pressures, although challenges would still persist (“elephants kissing”).

Recognizing the uncertainties ahead, businesses and policymakers in Thailand are urged to develop strategic responses, taking cognizance of the existing complexities and fostering resilience in trade and economic relations as they confront the long-term ramifications of these trade dynamics.

In conclusion, Thailand is grappling with significant hurdles posed by the United States’ trade war policies, necessitating strategic adaptations in its economic framework. Economic leaders stress the vital need for resilience through domestic strength, effective currency management, and leveraging regional alliances. Highlighting potential opportunities amidst these challenges, experts predict enduring trade volatility that could reshape Thailand’s economic landscape, compelling stakeholders to engage in proactive measures to mitigate risks and foster stability.

Original Source: www.nationthailand.com