Chinese imports impact four major Thai industries
nationthailand.com, 4 Sep '24
With just two months left until the US presidential election, analysts warn that the trade war between the US and China is likely to continue, regardless of who wins.
However, if Donald Trump wins, the impact on Thailand could be more severe, says a chief economist at a research firm.
The economist explains that increased tariffs on China are likely. This could make Thailand a key transit point for trade. As China's economy weakens, it may export more cheap goods to other countries, including Thailand. This influx of low-cost Chinese goods is already affecting Thailand, intensifying competition and harming Thai businesses.
In the first half of 2024 alone, Thailand's trade deficit with China reached US$ 30 billion. The trade war has reduced global trade volumes, limiting Thailand's trade opportunities and raising costs for Thai businesses.
The impact is particularly troubling for four major Thai industries: steel, automobiles, hard disk drives, and petrochemicals.
Rising costs and competitive challenges are becoming more pronounced, especially in the electric vehicle (EV) and petrochemical sectors.
Thailand's economy is struggling with low growth due to its reliance on traditional industries and a slow recovery in industrial production and trade. This low growth is affecting the earnings outlook for Thai companies, which are seeing declining profits.
Additionally, the lack of investment in new industries has led to stagnation in corporate earnings and minimal growth in the Thai stock market over the past decade.
To address these issues, the economist further recommends that the government impose tariffs on Chinese imports sold below production costs and ensure that these products meet Thai quality standards.
He also suggests attracting foreign investment, preparing the workforce for new industries, and addressing regulatory barriers to reduce restrictions on foreign investment.
"Ensuring political stability and encouraging Thai businesses to innovate and compete with higher-quality products are also crucial steps," he says.
