The deepening US financial crisis that has threatened their real economic sector, resulting in a US economic recession during 2H08 and into 2009 brings about much concern among Americans. This is the most important problem that the Fed and the US Treasury have attempted to solve before the US financial system collapses. During the upcoming period of transition to a new administration, it is likely that the new Treasury Secretary will continue to implement recent policies, especially those that are intended to address the financial crisis, approved by bipartisan support in Congress during the Bush administration. However, it is expected that the new President-elect will push the economic stimuli further to restore and remedy the US economy as promised. KASIKORN RESEARCH CENTER (KResearch) has projected the impacts of the US presidential election results on Thailand:
-Demand for imported Thai products in the US, particularly luxury items will decrease due to negative factors stemming from the ‘twin deficits' and a surging, high unemployment rate. In addition, the proposed economic stimuli of President-elect Barack Obama may fail to inspire confidence among American consumers because some believe that he will raise taxes in order to compensate for the large spending debt needed to stimulate the economy. As a result, they will inevitably be economizing in order to cope with an unstable future.
-Thai exports to the US might be affected by their higher budget deficit which could depreciate the value of the US Dollar (while other factors that might affect the US Dollar remain unchanged.) Asfor the direct impact, the prices of Thai products in the US will adjust higher due to the stronger Baht. On the indirect impact, any depreciation in the US Dollar would likely drive the Yuan higher, so the price of Chinese export products would become more expensive, which could decelerate Chinese exports to the USA. As a result, Thai exports would decelerate as well.
- Thai businesses will face both tariff and non-tariff trade barriers. Thai farm produce exporters may be severely affected because many Democratic Party supporters are in the urban workforce or are farmers. Also, Thai exports might face ‘intense protectionism', which could include stringent trade regulations, retaliation and import bans on Thai products due to the labor rights violations and environmental problems.
- FTA negotiations between USA and Thailand might be postponed because Pres. Obama tends to oppose trade liberalization, particularly with countries that have lower production costs and wages. Due to the current US economic recession, Pres. Obama might favor other kinds of trade negotiations or cooperative arrangements that would not affect US domestic employment. He might use trade agreements to promote US products to other countries.
- If the new requirements for environmental and labor standards of the US government are made too rigid and exceed the production standards of developing countries – including Thailand – they would become trade barriers to Thai manufacturers and exporters, because we would have to shoulder higher production costs to upgrade our products to meet US standards.
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