Thailand urged to find ways to offset China slowdown
Thailand must strengthen its domestic economy and explore new export destinations to offset China's slower growth, says a source at the Finance Ministry.
The diminished pace of the world's second-largest economy and Thailand's second-biggest trade partner after the US is not expected to be short-lived, thus Thailand should strengthen its economy and seek new export markets in a bid to lessen the impact of China's transition, said the source, who requested anonymity.
China's economy is likely to grow by 6.7% this year, below last year's 6.8%, after constant growth of 6.7% for three quarters in a row.
The giant nation's economic growth is down sharply from the breakneck pace of more than 10% over the past three decades as it rebalances away from heavy industry and towards high-value services and domestic consumption for sustainable growth.
The World Bank has forecast GDP growth to average 5.5% a year until 2030.
The source said Thailand is fortunate to have high-risk buffers, with foreign reserves of US$180.5 billion as of September and a low ratio of public debt to GDP of 42.6%.
Moreover, rapid economic growth in Cambodia, Laos, Myanmar and Vietnam (CLMV) have helped offset the damage from China's slowdown, the source said.
The CLMV market has played a greater role in Thai shipments, accounting for 10.4% of the country's export value versus 11% for China.
In the long term, Thailand must move towards its 10 targeted industries to create an S-shaped growth curve, the source said.
The S-curve economy is categorised as existing industry (first S-curve) and future industry (new S-curve). The first comprises five industrial clusters: next-generation automotive, smart electronics, quality tourism, agriculture/biotechnology and food processing.
The new S-curve consists of robotics, aviation/logistics, biofuels/biochemicals, digital economy and medical hub.
The source said that the 10 targeted industry operators with a combined investment of 150 billion baht or 43% of the total Board of Investment's applications this year have already sought for investment incentives.