Thailand's economic outlook is becoming increasingly intertwined with global trade dynamics, particularly as tensions between the United States and China escalate. Dr. Kobasak Phutrakul, Executive Vice President of Bangkok Bank, predicts the return of Donald Trump to the U.S. presidency could signal a new era for international trade, potentially benefiting Thailand and other ASEAN nations as the two superpowers vie for supremacy.
Speaking on February 6, Dr. Kobasak shared his insights on his social media platform, Bnomics, emphasizing the historical precedent for trade wars when countries compete for dominant global positions. He warned, "The shift of power between the top two often leads to conflict, as seen when the UK relinquished its status to the U.S. after World War II."
According to Dr. Kobasak, the competition between China and the U.S. for number one supremacy is intensifying, with China rapidly approaching this status. He cited data indicating China's economic growth and expressed concern over the potential for a trade conflict.
“We should pay attention to how these trade dynamics could play out,” he noted, reflecting on the interconnectedness of global economies. He posited, “For the first time, the U.S. and EU are positioning themselves against China not just economically, but also politically and militarily.”
Dr. Kobasak predicted Vietnam, similarly to Thailand, would be under scrutiny as the U.S. seeks to renegotiate trade balances, particularly considering Vietnam's trade surplus with America. He stated, "If the U.S. intervenes against countries benefitting from trade, Thailand must position itself carefully to take advantage of these shifts." He emphasized the need for Thailand to diversify its export markets.
Concerns about agricultural exports and the impact of tariffs are significant for Thailand, which relies heavily on its agricultural sector. The potential consequences of such measures on the economy could be dire. Dr. Kobasak explained, "The agricultural sector is sensitive to trade tariffs, and we need to find ways to protect our interests."
He also highlighted the role of foreign direct investment (FDI) and the importance of maintaining Thailand's attractiveness as a manufacturing hub. Growing tensions between global powers could lead to shifts in investment patterns, prompting companies to seek more stable environments.
"Investors are jittery; we need to assure them Thailand remains stable and open for business," he asserted, indicating FDI has already showed signs of recuperation, noting an increase from the previous year. "The Bank of Thailand has recorded rising applications for investments, reaching the highest level seen over the past decade," he elaborated, underscoring the shifting tides of investment interest.
Dr. Kobasak asserted few nations could survive the magnitude of the trade conflicts currently brewing. He predicted, "Thailand must not only prepare to withstand the direct impacts of the U.S.-China trade tensions but also assume strategic positioning to capitalize on rifts between these giants."
Despite challenges, he remained optimistic about Thailand's export growth. Especially noteworthy was the 17.5% increase in exports to the U.S. recently, with exports to China also surging 15%. This suggests resiliency and the potential for Thailand to act as both the supplier and recipient of trade flows between the superpowers.
"There's also the implicit factor of partnerships with countries like India, Japan, and South Korea which will impact regional trade," he speculated, noting the growth rates of bilateral trade agreements. "Collaboration across ASEAN could bolster our position as key players might see us as gateways to global markets."
Thailand's tourism industry, another significant sector, faces hurdles due to varying perceptions of risk associated with global trade dynamics. "A downturn could discourage international travel, impacting our tourism figures devastatingly," he mentioned, cautioning stakeholders.
The anticipated volatility across investment markets means market confidence—often shaky during trade negotiations—is viewed as another hurdle. On days when policy changes occur, markets often react unfavorably, which could impede growth curves and investor sentiment.
Dr. Kobasak urged proactive measures, stating, “Thailand must focus on stabilizing relations with the U.S. Discussing trade balances and investment priorities is imperative.” He underscored the need for collaborative efforts to ease trade tensions and establish mutual benefits.
He emphasized the necessity for clarity from U.S. policymakers when addressing trade agreements. With uncertainties compounding, Thailand must clearly delineate its unique advantages to retain favorable conditions relative to larger trading partners.
Dr. Kobasak concluded by stating, "Navigations through the upcoming turbulence will require collaboration, clarity, and adaptability on our part, distinguishing Thailand as the optimal regional partner for trade amid this global realignment."