Trade friction and world economic instability likely to continue under the present US administration. Thailand still aims for 3% export growth in 2020 and economic growth of 2.7% to 3.7%.
Thailand is targeting growth of between 2.7% and 3.7% in 2020 with a growth in exports predicted at 3%. It comes as economic planners are hoping for a stronger economic performance in December to round out the year with the economy recording an export contraction for the year 1.6% to the end of October.
While there are many causes for concern moving into 2020 including the highly valued Thai baht and evidence that key trade partners are facing problems, Thailand recorded a 48% growth in exports to the United States in October and also posted a current account surplus for the year in the first ten months of $7.9 billion showing a widening trade surplus.
Thailand’s Council for Economic Ministers announced on Friday that a target growth rate of between 2.7% and 3.7% had been set for the Thai economy as the final quarter of the year comes to a close.
A briefing was given by Kobsak Pootrakool, deputy secretary-general to the prime minister for political affairs.
Private investment in 2020 predicted to be ฿3.13 trillion as Thailand looks beyond this year
It follows what has been a disappointing year for the Thai economy as the government predicts that the country’s exports for the year will end up contracting by 1.6%.
As Thailand went into last year, it was predicting a 4% growth rate in exports.
According to Friday’s briefing, economic ministers are predicting a 3% rise in 2020 together with stronger investment from the private sector from both local and foreign concerns.
The committee has forecast that investment in Thailand in the course of 2020 will be to the order of ฿3.13 trillion.
Ministers are also suggesting the tourism sector in 2020 will see 41.8 million visitors.
Urgent effort to disburse public budgets to drive the domestic economy especially in the last quarter
A key concern is the efforts of ministers to drive the proper disbursement public expenditure budgets to boost the domestic economy.
The urgency of this is acute in the final quarter as the government seeks to round out the year on a more optimistic note with the tourism high season and expectations that exports in the last month of the year will show a bounce.
One strong reason for this is the low base level for December 2018 when exports were only ฿19.4, a precursor to this year’s disappointing outcome.
October’s exports dropped by 4.5%
The news comes as the latest exports figures for October show a 4.5% drop for the period on a year on year basis.
However, the country recorded a stronger current account surplus as imports for the month decreased by 7.6% leaving Thailand with a trade surplus of over $506 million.
Agricultural products except for sugar showed the biggest contraction with rice exports, tapioca, rubber, steel-related products and TVs all hit.
ASEAN region exports hit hard
Exports to the ASEAN region were also down quite significantly by over 9% with a drop of over 8% in exports to the European Union.
Exports to China were down by over 5%.
Experts at the Commerce Ministry feel that the toughest period of the US-China trade war may be over as there was a pick up in computer-related exports in October.
Exports to the United States up by 48% in October
Significantly, exports to the United States were up by a whopping 48% in the month with a huge 97% increase in exports to Switzerland.
New trade pact with Turkey
Thailand, in recent weeks, has signed a trade pact with Turkey and is expected to begin talks with the European Union shortly towards a free trade agreement.
Thailand is also looking forward to the Regional Comprehensive Economic Partnership between ASEAN and five other Asia Pacific countries being ratified in February 2020.
However, the impact of this will take time to be seen significantly in trade patterns.
Trade surplus expanded in the first 10 months
The Director-General of the Trade Policy and Strategy Office at the Ministry of Commerce, Pimchanok Vonkorporn, confirmed this week that Thailand’s trade surplus for the first 10 months of the year was $7.9 billion even as exports contracted by up to 1.6%.
She warned that there were considerable downside risks going into 2020 notably the high-value of the Thai baht and a slowdown in the world economy which had impacted the kingdom’s major trading partners.
Stocks tumble this week as time frame for a US-China trade deal lengthens as Trump holds out
It comes in a week when stock markets in the US and worldwide tumbled as the first phase of a trade deal between China and the United States announced in October was put on the long finger.
Seasoned observers fear that under the current US administration, trade stability between the US and China may be too much to expect as this US President seems, from his statements, to be quite satisfied with the current situation.
Both US and Chinese leaders playing hardball
This week, while visiting an Apple supplier manufacturing facility in Texas, the President said this: ‘I haven’t wanted to do it yet because I don’t think they’re stepping up to the level that I want.’
Indeed this is now a familiar pattern as both the US and Chinese presidents stand back from the talks retaining veto power over deals hammered out by their aides as a negotiating tactic.
Both leaders appear determined not to be bested.
Trump thinks the US is winning
The problem for China, however, is that the current situation appears to be damaging its economy more than it is damaging the United States, at this point.
‘We continue to talk to China. China wants to make a deal. The question is: Do I want to make a deal? Because I like what’s happening right now. We’re taking in billions and billions of dollars,’ President Trump revealed to reporters on his trip to the lone star state this week.
Human rights in China a growing spectre not only in Hong Kong but more seriously in Xinjiang province
A growing but a significant hurdle to trade rapprochement has also emerged with stiffening of resolve by the US Congress concerning human rights in China.
This week, Congress passed a bill designed to strengthen the human rights of protestors and citizens in Hong Kong which the US president is expected to sign into law.
It is bound to provoke an adverse reaction from Beijing. Not only that but the US congress is also becoming increasingly vocal on the treatment of Uighur Muslims in the western Chinse province of Xinjiang.
It is reported that up to 1 million Uighurs have been imprisoned in the equivalent of concentration camps but Chinese authorities justify the repressive measures as it battles unrest in the area.
Thailand shows signs of adjusting to the US-China trade friction with a pick-up in computer exports
In the meantime, Thailand shows signs of adjusting to the trade friction between its two largest trading partners with the pickup seen in October in computer-related exports attributed to this.
However, it is also suffering from subdued domestic consumption and confidence despite elaborate government stimulus measures.
Car sales dropped by over 11% in October
Domestic car sales for October fell by 11.3% for the fifth month in succession.
However, two points should be noted.
One is that the drop was based in a superlative performance for car sales in Thailand for October 2018 when sales reached the highest level in 5 years.
The second point is this is seen as a direct effect of strong curbs imposed by the Thai central bank to rein in household borrowing focusing on new car sales which came into effect in April this year.
Further reading:
Economy not yet in crisis says central bank governor as ministers meet to discuss trade and tourism
Finance minister ready to take further action to prevent the Thai economy falling into recession
