Economic Slump In China Will Be Felt Here Also: Thai Opinion

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EDITORIAL

Economic slump in China will be felt here also

The Nation

Slowdown means cautious policies are best amid current uncertainty

THAILAND: -- China's slower growth has become an emerging factor to dampen the prospect of Thai economy. China is the biggest export market for Thailand while Chinese tourists contribute to Thailand's foreign exchange earnings every year. Therefore, if China's economic growth slows down, our economic sector is likely to feel a pinch.

Thai decision-makers and business people should thus be prepared for slower growth. The Thai Finance Ministry is monitoring whether China will experience a "hard landing". If that worse-case scenario happens, the Thai economic sector is likely to be hit. Thailand's economy is increasingly linked with China's. Trading activity have increased sharply over recent years.

In addition, the Thai government has plans for a number of contracts with Chinese partners in the near future.

The Chinese economy has become a major global player, and uncertainty from China's economic slowdown is perhaps a good reminder that Thai decision-makers should follow a cautious path.

Many around the world hoped that China's buoyant economy would be a like a locomotive to drive global growth while the European Union struggles with its economic woes. At the same time, the US economy has faced gloomy prospects from high unemployment.

However, the Chinese economy has recently shown signs of slowdown. For instance, the manufacturing sector may contract for a fifth consecutive month in March. Concerns over economic cool-down recently sent Wall Street shares plunging. After all, a slowdown in Chinese demand will take some heat out of the world commodity market.

Thai farmers have recently also felt the impact with less demand from our neighbour to the north. Rubber prices dropped because of the slower demand for vehicles. Ironically, only a couple of years ago, Thai farmers were encouraged to grow rubber with hopes that the rise in demand in China would continue. But the recent slowdown in growth suggests otherwise.

The Thai government has so far tended to be complacent, saying the economy here will continue to grow at a satisfactory level in part because of an assumption of continuing Chinese growth. In spite of the positive trend so far, Chinese economic growth is likely to be less than what the market originally anticipated.

The local business sector has, in recent years, managed to attract a diversity of markets and trading partners. This should help cushion any impact from incidents that may happen in any particular part in the world. Thailand has successfully shifted from its traditional markets in the US and the Europe. The greater diversity of dealings eases fears that the Thai economy will suffer because of economic troubles in the West.

The Thai government had planned to strike business deals with China on high-profile projects such as the high-speed train and tablet procurement. But, the Chinese economy is not immune to challenges. Its financial institutions will have to be further reformed.

Apart from weaker growth in China, the Thai economy also faces risks from uncertain oil prices, the lingering debt crisis in Europe, as well as fluctuating prices at home, which affects the level of the baht and inflation.

Thailand will have to learn from the crisis by taking a cautionary approach and wisely balancing our economic interests. An over-dependence on one particular market would not be wise.

-- The Nation 2012-03-26

[lovelomsak]

Gee what insight. When economies are failing and people have no purchasing power,cheap labour nations have nothing to sell.

[redroo]

In a nutshell !!

lovelomsak

Gee what insight. When economies are failing and people have no purchasing power,cheap labour nations have nothing to sell