The influx of Chinese goods has significantly affected Thailand's manufacturing growth and constrained loan expansion in the banking sector, says the Bank of Thailand's chief.
Speaking at the "Thailand Next Move 2025: Resiliency for an Uncertain World" seminar, hosted by Money and Banking magazine on Tuesday, BoT governor Sethaput Suthiwartnarueput said Southeast Asian countries, including Thailand, have recorded a steady increase in Chinese imports since 2014, with a notable surge beginning in 2020 because of intensifying geopolitical and economic fragmentation.
Between 2020 and 2023, Vietnam emerged as the largest Southeast Asian importer of Chinese goods, followed by Thailand, whose imports totalled US$71.1 billion in 2023.
Indonesia, Malaysia and the Philippines followed in terms of import volume.
According to Mr Sethaput, although domestic consumption has continued to grow, manufacturing growth has slowed, leading to a declining correlation between these two economic sectors.
From 2012 to 2020, the ratio of domestic consumption to manufacturing growth averaged 0.79%, then dropped to just 0.05% between 2021 and the third quarter of 2024.
From 2012 to 2020, average growth rates for manufacturing and domestic consumption were 1.6% and 1.8%, respectively.
However, between 2021 and the third quarter of 2024, manufacturing growth fell to 0.6%, while domestic consumption growth increased to 2.1%.
He said "geoeconomic fragmentation" has adversely affected loan growth in Thailand's banking sector, particularly for auto lending. In the third quarter of 2024, new auto loan growth contracted by 7.6% year-on-year, while used car loans plunged by 14.6%.
"Geoeconomic fragmentation is expected to persist, bringing heightened uncertainties on a global scale. Key factors contributing to this uncertainty include changes in US policies under the new administration, such as tariff policies that are likely to impact global trade and supply chains," said Mr Sethaput.
"In addition, US tax cuts and immigration policies, including deportations, could contribute to greater uncertainty and influence inflation rates. These factors are expected to impact the monetary policies of the US Federal Reserve and other central banks worldwide."
He said central banks globally have varied their monetary policy approaches following the pandemic based on the pace of economic recovery.
Mr Sethaput said the central bank will continue to follow an outlook-dependent approach rather than a purely data-dependent framework, aligning its policies with Thailand's economic circumstances.
The regulator is focused on enhancing the country's economic resilience and establishing strong buffers to handle unexpected situations. However, monetary policy alone cannot serve as a tool to increase economic resilience, he said.
The central bank has introduced several measures to strengthen buffers across various sectors, said Mr Sethaput.
Regarding Thailand's high level of household debt, the regulator plans to introduce a new debt restructuring scheme on Dec 11, building on its existing debt assistance programmes.
During the first nine months of this year, financial institutions provided financial aid to 6.1 million accounts, totalling 2.1 trillion baht, according to the BoT.