BANGKOK (Reuters) - A more protectionist United States under President Donald Trump could push Asian countries more quickly towards their own regional trade alliances, Thailand’s central bank governor said on Tuesday.
In a Reuters interview, Veerathai Santiprabhob cited as an example a grouping favoured by China over the Trans-Pacific Partnership (TPP), from which Trump withdrew the United States on Monday in one of his earliest acts as president.
Neither China nor Thailand are part of the TPP.
Given that Thailand’s two biggest export markets are the United States and China, Southeast Asia’s second biggest economy could quickly feel the impact of any fight that hurts trade.
“The fact that the TPP might not be moving forward might provide a better opportunity for some of the regional trade agreements,” the governor said. “It could be helpful for regional integration efforts.”
Veerathai said that could include the Beijing-favoured Regional Comprehensive Economic Partnership (RCEP), a proposed free-trade agreement which includes Southeast Asian nations, China, India, Japan, South Korea, Australia and New Zealand - but not the United States.
In formally withdrawing the United States from TPP on Monday, Trump fulfilled a campaign pledge to supporters who feel global trade has cost U.S. jobs.
As Thailand was not a TPP member, Trump’s move will not in itself have a big impact. Australia and New Zealand said on Tuesday they hoped to salvage the TPP by encouraging China and other Asian nations to join.
“It’s quite difficult to assess the exact impact at this point how the protectionism of the U.S. will have on emerging markets and Thailand,” the governor said, while pointing to likely market volatility and uncertainty.
Thailand is a big producer of electrical and other components which go into finished products destined for the United States and elsewhere. That makes gauging the impact of changes to trade rules even harder than for other countries.
Thai exports rose in 2016 for the first time in four years, according to data published on Tuesday. But exports, traditionally a growth engine for Thailand, have not given the economy a needed boost.
The central bank’s forecast is for no export growth in 2017.
The governor said that the 2016 data gave reason for optimism, but there would be no change to this year’s forecast yet - particularly in light of the global uncertainty.
Thailand’s economic growth has lagged that of regional peers since a 2014 coup despite the junta’s efforts to kickstart the economy through spending.
The governor said growth could pick up this year as a result of government spending and because last year’s figures were weaker due to drought in agricultural regions and the death of King Bhumibol Adulyadej, which sent Thailand into mourning.
The central bank forecasts 2017 growth of 3.2 percent, the same as its estimate for last year.
Thailand’s central bank is independent, but the central bank governor is appointed by the government. Veerathai began a five-year term in October 2015.
Editing by Richard Borsuk