The influx of Chinese goods has had a substantial impact on Thailand’s manufacturing growth and has constrained loan expansion in the banking sector, according to the Governor of the Bank of Thailand (BoT).
Speaking at the “Thailand Next Move 2025: Resiliency for an Uncertain World” seminar organized by Money and Banking magazine on Tuesday, BoT chief Sethaput Suthiwartnarueput highlighted that Southeast Asian countries, including Thailand, have seen a steady rise in Chinese imports since 2014, with a significant increase occurring in 2020 due to escalating geopolitical and economic fragmentation.
From 2020 to 2023, Vietnam emerged as the largest importer of Chinese goods in Southeast Asia, followed by Thailand, which totaled US$71.1 billion in imports in 2023. Indonesia, Malaysia, and the Philippines ranked next in import volume.
Mr. Sethaput noted that while domestic consumption continues to grow, the pace of manufacturing growth has slowed, leading to a decreased correlation between the two sectors of the economy. The ratio of domestic consumption to manufacturing growth averaged 0.79% from 2012 to 2020, but fell to just 0.05% between 2021 and the third quarter of 2024. During the earlier period, manufacturing and domestic consumption grew at average rates of 1.6% and 1.8%, respectively. In contrast, from 2021 to the third quarter of 2024, manufacturing growth dropped to 0.6%, while domestic consumption increased to 2.1%.
He explained that “geoeconomic fragmentation” has negatively impacted loan growth in Thailand’s banking sector, particularly in auto lending. In the third quarter of 2024, new auto loan growth decreased by 7.6% year-on-year, while used car loans fell by 14.6%.
“Geoeconomic fragmentation is expected to continue, leading to increased global uncertainties. Factors contributing to this uncertainty include changes in US policies under the new administration, such as tariff adjustments that may affect global trade and supply chains,” Mr. Sethaput stated. He added that US tax cuts and immigration policies, including deportations, could introduce further uncertainty and influence inflation rates, subsequently impacting the monetary policies of the US Federal Reserve and other global central banks.
The governor noted that central banks worldwide have adopted varied monetary policy strategies post-pandemic, influenced by the pace of economic recovery.
Mr. Sethaput mentioned that the central bank aims to adopt an outlook-dependent approach, rather than relying solely on data, to tailor its policies to Thailand’s economic conditions. The regulator is focused on enhancing the nation’s economic resilience and establishing robust buffers against unforeseen events. However, he emphasized that monetary policy alone cannot solely boost economic resilience.
The central bank has initiated several measures to strengthen buffers across different sectors, he added.
In light of Thailand’s high household debt levels, the BoT plans to launch a new debt restructuring scheme on December 11, building on its existing debt assistance programs. During the first nine months of this year, financial institutions provided assistance to 6.1 million accounts, amounting to 2.1 trillion baht, according to the BoT.
