Strengthening Thai Baht Strangling Thailand’s Economy

BANGKOK – In a joint statement, three leading business associations slashed their 2019 economic growth and export forecasts for Thailand as the Thai Baht continues it strength.

The Federation of Thai Industries, the Thai Bankers’ Association and the Board of Trade of Thailand slashed their growth estimate to 2.9% to 3.3% from the 3.7% to 4.0% seen in April.

They now expect exports, a key driver of growth, to rise or fall 1% this year, rather than increase 3% to 5%.

Although the new government plans to introduce stimulus measures to boost the economy in the second half, this may not offset the impact of the export slowdown.

Especially at a time of softening global demand and a strong baht, Predee Daochai, president of the bankers association and the joint business groups told the Bangkok Post.

Rate Cut

The groups are asking for government moves to contain the baht’s gains and for the Bank of Thailand (BoT) to cut interest rates, industries federation president Supant Mongkolsuthree said.

“We want the government to come up with measures to take care of the baht, which is the world’s strongest currency. If possible, we want the central bank to cut its policy rate,” he said.

The groups will seek to discuss the baht, which has strengthened about 5.6% this year, with the central bank, Supant said.

Bank of Thailand governor Veerathai Santiprabhob said on Monday the central bank was not happy with “hot” money flowing in and would be ready to impose measures if inflows were unusually large.

But he said there was no need to quickly adjust monetary policy.

The Bank of Thailand has left its benchmark interest rate unchanged at 1.75% since a hike in December. It next reviews policy on Aug 7, 2019.

Thailand is Southeast Asia’s second-largest economy last year expanded 4.1%, the most in six years.