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A challenging Baht for the Thai economy in 2019 ?

Exporters are increasingly worried as the Thai baht continues to perform against the US dollar

Olivier Languepin

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Thanks to Thailand’s walloping US$207 billion of foreign reserves, Thai baht’s climb of about 5% against the dollar in the past six months is the strongest in the world, according to data compiled by Bloomberg. 

This may be good news if you plan to travel abroad, but not so good if your business is exporting Thai products.

According to KBank forecast, the baht’s value could appreciate to 31.50 against the US dollar this quarter because prevailing global financial volatility is poised to compel investors to seek refuge in new safe-haven destinations.

“It will be tough this year,” said Duangrat Prajaksilpthai to the Bangkok Post, an economist at TMB Bank.

“Exports were already expected to slow down because of the impact of the trade war. Baht strength on top of that will curb export revenue when converted to local currency.”


Duangrat Prajaksilpthai, economist at TMB Bank.

The Bank of Thailand raised its benchmark interest-rate in December for the first time since 2011, by a quarter point to 1.75% , but the baht’s climb could complicate the central bank efforts to normalize policy by weighing on already below-target inflation.

Thailand’s current account balance accounted for 10.8% of GDP in 2017, thanks to increasing tourism revenues, is also the eighth highest in the world, based on data compiled by the International Monetary Fund.

Bangkok Correspondent for Siam News Network. Editor at Thailand Business News

Investment

Thailand Q1 Investment Applications Soar 80% as FDI More Than Double says BOI

The top three source countries of FDI applications during the first quarter were South Korea, China, and Singapore, with similar levels of investment. Korean investment soared due to a large-scale joint venture in the medical sector, Ms Duangjai said.

Pr News and BOI

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The Thailand Board of Investment (BOI) said today that in the first quarter of 2021, investment applications rose 80% from the year earlier period to a total value of 123.4 billion baht (USD3.9 billion), led by projects in the medical and electric and electronics (E&E) sectors, as foreign direct investment (FDI) applications more than doubled.

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Economics

Finance Ministry Reduces 2021 Growth Forecast to 2.3%

Fiscal Policy Office (FPO) Director-General Kulaya Tantitemit said the ministry slashed its forecast for the number of foreign tourists to only 2 million this year from 5 million it had predicted three months ago.

National News Bureau of Thailand

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Export growth better-than-expected in December 2020. However, amid the second wave of COVID-19 infections, exports could fall below previously forecasted levels in 2021.

BANGKOK (NNT) – The Finance Ministry has reduced its 2021 economic growth forecast for a second time to 2.3% from 2.8% growth, after a third wave of coronavirus infections struck Thailand this month.

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Economics

Developing Asia growth set to rebound to 7.3% in 2021 (ADB)

Thailand slow vaccination progress coupled with a surge of infections has prompted Kasikorn Research Centre to lower its growth projection for the Thai economy this year from 2.6 percent to 1.8 percent. However, ADB’s forecast for Thailand growth in 2021 remains set at 3% (and 4.5% in 2022).

Olivier Languepin and Asian Development Bank

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MANILA, PHILIPPINES (28 April 2021) — Economic growth in developing Asia is set to rebound to 7.3% this year, supported by a healthy global recovery and early progress on coronavirus disease (COVID-19) vaccines, according to a new report from the Asian Development Bank (ADB).

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