US Elections to Impact Thailand’s 2017 US-bound Exports (Current Issue No. 2790)

The US presidential election on November 8, 2016, would be a competition between Hillary Clinton and Donald Trump. The new US president may face some hardships working with Congress of which the majority of each house is from different party, suggesting that policies will likely be based on bipartisan approaches.

KResearch supposes that in 2017, the first year in office of the new administration, will probably see no great changes due to a new economic blueprint just yet. Growth in the US next year will likely be a result of continued momentum in consumption from this year. If Hillary Clinton wins the election and become the new US President, we believe that she will continue some of the Obama administration's policies and lead the country in a direction with similar approaches to his. But real impact on global economies will likely depend on how things develop after the Fed's rate hike. The US Dollar may then harden against other major currencies. In this case, the GDP growth might reach 2.2 percent in 2017, up from the 1.6 percent estimate for 2016.

In case voters choose Donald Trump, as they look forward to significant economic changes, there will be more uncertainty for the economy, thus a lesser 1.7 percent GDP growth is forecast for 2017. The Fed may be forced to take a longer and harder look at whether a rate hike is prudent, causing more delays. If investors express greater anxiety, they will likely reduce their USD-denominated assets, thereby weakening the US Dollar. Even so, getting Congress to greenlight the new administration's economic policies may not be an easy task.

KResearch has assessed that Thailand could earn around USD24.68-24.98 billion from exports to the US in 2017, representing an expansion of somewhere between 1.3-2.5 percent, continuing this year uptick of 1.3 percent. Thai companies should focus more on higher manufacturing standards and better quality to avoid being hindered by non-tax trade barriers; they should also be prepared for the possibility that the US could terminate GSP benefits for Thailand at the end of next year. Moreover, it is expected that the US will increasingly lean toward protectionist foreign policies. The TPP, as well as other policies related to trade and investment between the US and their trade partners will all require a closer watch. –KResearch

Remarks: Projections in this paper was made on November 7, 2016 before the US presidential election; further developments on the new administration's policies as well as other details must be watched closely.