BOT expects Trump's policies to affect Thai economy in 3 ways
BOT warns 68 global economic turmoil drags down Thai economy to less than 3% growth, reiterates monetary policy remains flexible, assesses impacts from Trump's policies could affect Thai economy in 3 areas
6 Jan 2568 Mr. Sakkapop Panyanukul, Assistant Governor, Monetary Policy Department, Bank of Thailand (BOT) Revealed at the Monetary Policy Forum that This year's economy is more uncertain due to both the intensifying geopolitical factors and the much higher uncertainty of the policies of major trading partners, especially the US economic policies. This has not been included in the estimates because of the high level of uncertainty.
It is expected that Q4/67 will grow by no less than 3% and the driving factors will come from exports and the service sector, which will remain the main driving forces. As for the effects of US policy, in terms of the initial period, it may not be clear yet. We have to wait until the second half of the year when the policy will start to have an impact and how much of an impact it will have on Thailand.
In terms of future monetary policy The Thai economy is still recovering, but there is still an uneven recovery and there is still higher uncertainty in the future, especially in the second half of this year. Therefore, the implementation of monetary policy must be flexible and able to support diverse situations and give importance to maintaining policy buffers in various aspects as well as considering the combination of policy tools appropriate for the developments that will occur.
In terms of the direction of the baht this year It is believed that there is still volatility from economic policies that are challenging and difficult to predict, resulting in financial costs or exchange rates fluctuating as well.
Ms. Pranee Sutthisri, Senior Director, Macroeconomics Department, Bank of Thailand Said that the Thai economy this year is expected to expand by 2.9%, driven mainly by domestic and foreign demand, while tourism this year is expected to have 39.5 million foreign tourists. The Thai economy is likely to expand close to its potential, with the main driving force coming from exports of goods, which are expected to expand by 2.7% this year, imports expanding by 1.7%, tourism and domestic demand.
However, the Thai economy this year still has positive factor From the government's economic stimulus measures, such as the second and third phases of the money transfer measures, the Easy e-receipt measures, it is necessary to monitor how much effect they will have on the economy, while negative factors We must monitor the severity of the US trade protectionist policies that will affect the global economy and the Thai economy in the future.
“The first half of the year will see an acceleration in exports, but in the next phase, there will be uncertainty about the US trade protectionist policies, which will cause the second half of the year to slow down. Although the economy has expanded close to its potential, the recovery is still different. The groups that have recovered well are tourism and other services, while the groups that have recovered slowly are electronics and automotive, which are still groups that have shown worse development. Last year, automotive production decreased due to structural cycles, etc.”
Ms. Pranee said that the impact of the Trump administration's economic policies is still highly uncertain. The impact on the Thai economy may occur through three channels:
- Trade channels (Thailand exports less to China – Thai products have to compete more with China (China flooding) Thailand exports to the US instead of China)
- Investment channels (There may be a relocation of production bases from China to Thailand or ASEAN, but investment may be delayed due to global economic uncertainty.)
- Channels of connection with the Chinese economy (Chinese economy slows down, impacts may be felt on Thai exports and tourism)
“US trade barriers could also lead to a greater influx of Chinese goods into Thailand, which would put additional pressure on the already slow recovery of the industrial sector.”
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