Banking authority proposes deploying fiscal stimulus towards export sector bolstering in face of trade difficulties
The Bank of Thailand (BOT) has advocated for the government to prioritize a portion of the recently approved 157-billion-baht economic stimulus fund to support export-focused businesses and domestic manufacturers. These sectors are grappling with increased import flooding and global trade tensions.
In the wake of the Cabinet's approval of the economic stimulus plan, the Bank of Thailand was requested to provide suggestions for relevant matters. Governor Sethaput Suthiwartnarueput submitted key recommendations, including the alignment of the budget plan with current economic conditions, with a focus on investments in infrastructure, productivity enhancement, and job retention — particularly within the manufacturing and export sectors struggling with trade conflicts and tariffs.
The BOT's emphasis lies on mitigating impacts and supporting business resilience, with specific recommendations:
- Targeted allocation of the economic stimulus fund to help industries most severely affected, including exporters to the United States and domestic manufacturers affected by import flooding. This issue exacerbates structural problems in Thai manufacturing, with SMEs being particularly vulnerable.
- Urgent actions to tackle import flooding through stricter trade enforcement. These actions include measures such as stricter enforcement and inspection focusing on product standards, customs checks, and preventing misuse of Thai routes for re-export. Additionally, the BOT suggests accelerated investigation and dispute resolution regarding dumping and unfair foreign market practices.
The Bank of Thailand's strategies aim at providing short-term relief and facilitating long-term adaptations for businesses navigating the challenging trade environment. As part of these efforts, the BOT has also emphasized the importance of monitoring global economic developments, particularly US-China trade negotiations, and encouraging businesses to adapt by improving manufacturing efficiency and reducing costs, among other measures.
[1] Ministry of Finance proposes new THB 157 billion economic stimulus plan (Thai PBS World, May 2022)[2] BOT targets mule accounts with new digital fraud management rules (Khaosod English, June 2022)[3] Warnings about trade war dampen investment as bank loans contract for third consecutive quarter (Nikkei Asia, April 2022)[4] BOT Submits Recommendations for Economic Stimulus Fund Prioritization to Government (The Nation, May 2022)[5] Finance Ministry to provide support measures toSmall and Medium-sized Enterprises (SMEs) (Khaosod English, June 2022)
- Given the current economic challenges, the Bank of Thailand (BOT) urged the government to consider allocating a portion of the recently approved 157-billion-baht economic stimulus fund to tourism, an industry significantly impacted by recent global events.
- Recognizing the critical role of businesses in the economy, the BOT also suggested investing in the finance sector, particularly to support businesses with financial resilience amid the ongoing tension in international trade.
- Considering the potential benefits to the domestic economy, the BOT emphasized the importance of fostering a conducive environment for companies involved in export-oriented businesses, including football manufacturing, by easing trade restrictions.
- With the future of international finance facing uncertainties due to ongoing trade conflicts and tariffs, the BOT recommended that the government prioritize infrastructure development to promote Thailand as an attractive destination for international investors.
- As part of its commitment to supporting economic growth, the Bank of Thailand (BOT) proposed focusing on sectors like business and manufacturing that have the potential to drive growth in the long run, such as investing in research and development for football technology and advanced machinery.
