Academics expect the Fed to hold interest rates at next week's meeting. Looking at the UAW's massive strike, if it lasts longer than 2 months, it will cause immediate economic damage of no less than 5-9.1 billion dollars.
Mr. Anusorn Thamjai, former director and member of the audit committee The Bank of Thailand revealed that it expects the US Federal Reserve to hold interest rates at the highest level in 22 years despite increasing inflationary pressures. General inflation in the United States in August was 3.7%, while inflation recovered to 4.3%. General inflation increased 0.6% from the previous month, the biggest increase this year. But it is still lower than the highest level of 9.1% in June last year, reflecting that the recent interest rate hikes to control inflation have worked to some extent.
At next week's meeting, September 19-20, the Federal Reserve is likely to maintain interest rates at the current level of 5.25%-5.50% and may maintain interest rates at this level or increase them at the end of the year again, depending on economic numbers. and inflation in the fourth quarter of this year. It is expected that interest rates at the highest level, reflecting tight monetary policy, will continue until inflation returns to the 2% target, which is expected to occur in the middle of next year. May reduce interest rates thereafter in the second half of 2024, making policies to maintain short-term economic stability.
Mr. Anusorn Thamjai, former director and member of the audit committee The Bank of Thailand further said that a major UAW strike could cause immediate economic damage of no less than $5-9.1 billion if the strike lasts more than two months, but would reduce economic inequality in the long run. If there is an increase in wages and benefits as the UAW union demands, Anderson Economic Group assesses the impasse. The strike by UAW union members at Ford, General Motors, and Stellantis will last approximately 10 days. Initially, the damage and economic costs will be estimated at $5 billion or 179,500 million baht, with the loss of 25,000 automobiles from the market. 10 days off work
Meanwhile, economic research agency Ehrlich Research Group at the University of Michigan said the distribution of income effects United States national income is still limited in the short term. If the strike lasts for about two weeks, it will affect national income by approximately 440 million dollars or 15,796 million baht, while if the strike lasts longer than 2 months or more, the strike will expand. Economic losses will total $9.1 billion or 329.69 billion baht. Union members on strike will receive $500 a week from the UAW, support that will not be enough to survive if the strike lasts long. The strike action will affect economic transactions in the strike zone. The automotive industry has been hit by a shortage of computer chips in recent years.
and has closed the factory during the COVID outbreak Many factories and companies closed factories, went bankrupt, laid off workers and cut salaries. Compensation and welfare of workers during 2020, with the automotive industry business showing a clear recovery since mid-2021 and profits clearly increasing. With executive compensation increasing approximately 40% from 2019 levels, the UAW union's movement is justified in achieving fair pay. From a level that was greatly reduced during the COVID economic crisis of 2020, a public opinion survey found that The majority, more than 70%, support a strike to demand fair wages, so it is expected that the protest is unlikely to last long. The negotiations are likely to end quickly, however, the prolonged protests are affecting the US economy. the direction of monetary policy to a certain extent Including the effect on next year's presidential election. The challenge for US auto companies is how to stay competitive as costs increase.
What remains to be followed is whether the strike will spread to other factories or not. And what effect does it have on the world automotive industry? How does it affect the automotive industry in Thailand? This can have both positive and negative impacts on the Thai automotive and automotive parts industry because Thailand used to be the “Detroit of Asia” in the era of automobile production with internal combustion engines. The future of the automotive industry It's that electric cars (EVs), not internal combustion cars, emit more air pollution. Thailand is a major producer of internal combustion vehicle parts. EVs don't need these parts. The internal parts production factory will disappear. At the same time, if it adapts to making batteries. Thailand does not have supporting mineral resources such as lithium or cobalt. The factory in Thailand will be just a base factory for battery assembly production. Battery assembly operators will not have much added value. The automotive and automotive parts industries will shrink significantly
Source: Thai News Agency