As the global economy faces increasing volatility, Thailand's government is taking steps to address the anticipated impacts on its domestic economy. Prime Minister Ms. Paetongtarn Shinawatra emphasized the need for a structural shift in the economy during a recent Cabinet meeting, highlighting the challenges posed by external factors such as the ongoing trade war and rising import tariffs imposed by the United States.
According to Mr. Jirayu Huangsap, Permanent Secretary of the Ministry of Finance, the National Economic and Social Development Board (NESDB) expressed concerns about the negative repercussions from the global economic situation. The World Bank and other institutions have projected a decline in global economic growth, which is expected to affect Thailand's economy, especially its export sector, which relies heavily on international markets.
In light of these challenges, the Thai government is focusing on boosting the domestic economy to create resilience against global fluctuations. "We need to enhance domestic economic growth to better withstand the volatility of the global economy," Ms. Paetongtarn stated, urging for a collaborative effort among all sectors, including government, private businesses, and citizens, to navigate this crisis.
During the Cabinet meeting, it was noted that Thailand's revenue collection is likely to fall short of targets due to the impacts of the global economic downturn. The Prime Minister instructed Deputy Prime Minister and Minister of Finance, Mr. Pichai Chunwachiras, to discuss these issues with the Economic Stimulus Committee and report back to the Cabinet promptly.
In a related development, the garment industry, a key sector for Thai exports, is bracing for further challenges as it attempts to recover from the COVID-19 pandemic. Mr. Yutthana Silpsornwich, a committee member of the Thai Garment Industry Association, reported that while the export value of garments rose by 5% in the first quarter of this year, the sector is now facing potential impacts from the U.S. tariffs.
The U.S. has historically been Thailand's largest market for garment exports, and the imposition of reciprocal tariffs ranging from 11% to 50% could severely affect future orders. "The increase in tariffs will make our products more expensive and less competitive in the U.S. market," Mr. Yutthana warned, noting that many orders had already been placed before the tariff announcements.
Despite the current optimism surrounding garment exports, experts predict that the sector could see a decline of 10% this year if the tariffs are enacted. The anticipated delay of 90 days before the tariffs take effect may provide a temporary reprieve, but it also creates uncertainty for future orders.
Meanwhile, the Thai government is actively working with U.S. Customs and Border Protection (CBP) to monitor and restrict imports that may be misrepresented as Thai exports. Ms. Arada Fuengthong, Director-General of the Department of Foreign Trade, revealed that the department is coordinating with CBP to establish a list of goods that require monitoring to ensure compliance with U.S. trade laws.
Currently, there are 65 items under scrutiny, including various textiles and automotive parts. Ms. Arada emphasized the importance of accurately identifying these goods to protect Thailand's legitimate exports and avoid any potential trade disputes.
As the situation evolves, Thailand's government remains committed to fostering a collaborative environment among all stakeholders to address these economic challenges. The Prime Minister encouraged citizens to stay resilient and united during these trying times, stating, "In the midst of crisis, there are always opportunities. Let us work together to overcome this adversity."
In summary, as Thailand navigates the complexities of a shifting global economic landscape, the government is poised to implement measures aimed at enhancing domestic growth while addressing the potential impacts of international trade policies. The focus remains on building a robust economy that can withstand external pressures and support the livelihoods of its citizens.
