World Economy

China Problems Hurting Thai Exports

China Problems Hurting Thai ExportsChina Problems Hurting Thai Exports

Thailand plans to boost domestic consumption and state investment this year as China’s economic problems will have a “considerable” impact on its traditional growth engine of exports, the finance minister said.

Exports account for more than 60% of the Thai economy, but over the past three years they have been weak and unable to help lift growth, Reuters reported.

Fall in commodity prices at the start of 2016 may mean it is again hard to have exports drive growth.

China, Thailand’s second-largest market after the US, accounted for 11.1% of total exports for January-November 2015, according to the commerce ministry data.

“China’s problems will have a considerable impact on our exports,” Finance Minister Apisak Tantivorawong told reporters.

He said using public sector investment and “people’s spending” will support the Thai economy. The minister gave no details of plans.

Deputy Prime Minister Somkid Jatusripitak said issues in China “may cause volatility and affect the global markets but Thailand’s fundamentals are still strong”.

Somkid said the Thai central bank can keep the baht at a level “appropriate for the economy”.

Thai officials are counting on the number of Chinese tourists to remain high. Around eight million Chinese visited Thailand last year, helping tourism be a bright spot for the economy.

Rahul Bajoria, regional economist at Barclays, said the flow of tourists from China should continue this year.

“I do not think tourism demand will slow down dramatically, given Thailand’s proximity to China and rising Chinese incomes,” said Bajoria.

The World Bank on Wednesday said Thai economic growth will slow to 2% in 2016 from 2.5% last year.

The central bank has trimmed its 2016 GDP forecast to 3.5% from 3.7%, mainly due to poor exports.

 Economy to Grow

Kasikorn Bank has forecast the Thai economy will recover slowly due to household debts and the sluggish global economy.

Executive Vice President of Kasikorn Bank Noppawan Jermhansa said the Thai economy would grow 3% this year in a gradual manner. The level of household debts is also expected to rise.

Kasikorn Bank will adopt a proactive approach to attract more clients this year. It has targeted new start-up businesses, a new group of investors and those living in business districts nationwide.

According to the executive vice president, the bank is determined to increase its client base by 7% to a total of 14 million people. It is also striving to be Thailand’s top digital banking service provider again in 2016. Kasikorn currently has a market share of 39% with nine million clients across the country.