Impact of imports a factor in weak recovery of some key economic sectors, says regulator
PUBLISHED: August 22, 2024 at 21:05
According to Piti Disyatat, secretary of the central bank’s monetary policy committee, Thailand has had a consistent trade deficit with China since 2001.
The Bank of Thailand supports government initiatives to solve the problem of cheap Chinese products flood the Thai market.
According to Piti Disyatat, secretary of the central bank’s monetary policy committee, Thailand has had a consistent trade deficit with China since 2001.
The price index for imported goods from China is lower than the overall index for all imported products, including durable and non-durable goods and machinery, he said.
“The influx of Chinese goods has affected Thailand’s manufacturing sector to varying degrees depending on the industry,” said Mr Piti.
“This situation has also helped keep inflation in Thailand at low levels. While low inflation benefits consumers by lowering the cost of living, it has a negative impact on the manufacturing sector and overall competitiveness.”
“Countries around the world are affected by a flood of Chinese products and many have taken various measures to address the problem. The central bank supports the government in its efforts to address this challenge.”
He said locally made products such as electrical appliances, textiles and furniture are expected to continue to face pressure from an avalanche of Chinese goods. Some industries, such as the automobile industry and its suppliers, are struggling due to Thailand’s uneven economic recovery, Mr Piti said.
According to the central bank, the sectors experiencing a weak recovery are automobiles, integrated circuits and hard disk drives. These industries account for 6% of GDP, 5% of total employment and 6% of all business activities.
According to the central bank, sectors where recovery is uncertain include real estate and construction, agriculture and those directly affected by the influx of Chinese products. Together, these sectors account for 34 percent of GDP, 51 percent of employment and 30 percent of all businesses.
The regulator said the real estate and construction sectors had also been affected by recent delays in the disbursement of government funds. Slower growth in real estate, construction and mortgage loans was also clouding the economic recovery in these sectors.
The tourism and services sector has recovered, although second-tier cities benefit less than major tourism destinations. These sectors account for 60 percent of GDP, 44 percent of employment and 64 percent of all businesses.
As a result, tourism is expected to be a key driver of Thailand’s economic growth this year, according to the central bank.
Mr Piti said the baht’s volatility against the dollar had had varying effects on businesses. However, the baht’s movements were in line with those in the region and were largely influenced by the greenback as well as US monetary policy, the central bank noted.
Domestically, rising gold prices and rapid political change following the appointment of the new prime minister have contributed to greater stability in the new government, he said. These domestic factors support a stronger baht against the dollar, Mr Piti said.
This year, the baht has remained stable against the dollar after depreciating earlier in the year, and has been trending upwards in recent weeks, he said.
