Much Ado About Nothing? Estimating the Impact of a U.S. Slowdown on Thai Growth

Author/Editor:

Shekhar Aiyar ; Ivan Tchakarov

Publication Date:

May 1, 2008

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

External demand was the main driver of growth in Thailand in 2006 and 2007. However, WEO projections indicate moderating foreign demand in 2008, with U.S. growth being revised downwards to reflect the turmoil in housing and credit markets, and high oil prices. While the share of Thai exports to the US has fallen in recent years, the US remains Thailand's largest export destination. We use a small structural model and Bayesian estimation to assess the possible impact of a U.S. slowdown on Thai growth. We find that a 1 percent slowdown in U.S. growth in 2008-relative to the baseline forecast-could have an upper-bound impact on Thai GDP growth of 0.9 percentage points.

Series:

Working Paper No. 2008/140

Subject:

Exchange rates Inflation Output gap Real exchange rates Real interest rates

English

Publication Date:

May 1, 2008

ISBN/ISSN:

9781451869989/1018-5941

Stock No:

WPIEA2008140

Pages:

18

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