(Bloomberg) -- Thailand risks missing its growth target next year if President-elect Donald Trump follows through with his pledge to raise tariffs on imports into the US as it could hurt the Southeast Asian nation’s exports and weaken its currency, according to a study.
Thailand’s economy could potentially lose about 160.5 billion baht ($4.6 billion), shaving off about 90 basis points from its projected 3% gross domestic product growth next year, Thanavath Phonvichai, president of the University of the Thai Chamber of Commerce, told a briefing on Wednesday.
“This is a quite a seizable and unavoidable hit to our economy,” Thanavath said, citing a university study based on Trump’s previously announced tariff plans. “Our target to reach 3% growth next year will be at risk.”
Thai authorities are preparing to shield its economy from possible trade tensions under Trump’s presidency and sustain a tepid recovery in growth through a mix of cash handouts and debt-relief measures. Thailand was among the beneficiaries of the US-China trade war during Trump’s first term in office when companies relocated businesses from China to bypass punitive tariffs and trade curbs.
The hit to Thai economy may come directly from reduced exports to the US, it’s largest market, as well as indirect impact stemming from supply chain disruptions, the study showed. Trump’s policies will also weaken the local currency and lower US investment in Thailand, Thanavath said.
Shipments of Thai electrical equipment and electronics will likely be the hardest hit as nearly one-fifth of the nation’s total exports go to the US market, the university said in a statement. Other key industries set to fall into the crosshairs of a trade war are machinery, processed food, auto, steel and rubber.
The benefits from an escalation in US-China tensions will be Thailand’s ability to replace Chinese products in sectors such as machinery, electrical appliances and rubber, the university said.
©2024 Bloomberg L.P.